Full Breakdown
Rupee Extends Rally Amid RBI Action and US-Iran Hopes
5/25/2026, 8:43:17 PM
Rupee Extends Rally
The rupee rose 0.4% to 95.2775 per U.S. dollar on Monday, marking a third straight session of gains. The move coincided with Brent crude falling over 5% to $97.8 a barrel, the lowest in more than two weeks, which lifted risk sentiment for oil-importing economies.
Background
A week earlier the rupee hit a record low of 96.96 per dollar. Firm RBI intervention on Thursday and Friday helped reverse that decline, and the central bank signaled readiness to act further, noting the currency’s undervaluation in nominal terms and its real effective exchange rate (REER).
Data
Impact
A stronger rupee reduces import-oil costs, easing inflationary pressure and supporting India’s external balance. Continued appreciation could push the exchange rate toward the 100-per-dollar threshold, affecting export competitiveness and informing monetary-policy decisions.
Official Statements & Outlook
Governor Sanjay Malhotra said the RBI will “do whatever is required” to keep the foreign-exchange market orderly and noted the rupee’s recent fall made it undervalued. MUFG warned that easing pressure on the rupee, Indonesian rupiah and Philippine peso would likely need a de-escalation of U.S.–Iran tensions, while RBI intervention and possible rate hikes could provide intermittent support. Reuters reported the RBI may use deposit schemes for non-resident Indians and tax tweaks for debt investors as additional tools.
Conflicts & Gaps
The source does not disclose the exact scale of RBI interventions or the timeline for any proposed deposit or tax measures, leaving uncertainty about the depth of the policy response.
Outlook
Upcoming developments include progress in U.S.–Iran negotiations, potential RBI actions to stabilize the rupee, and the possibility of interest-rate adjustments. Market participants will watch Brent crude trends and geopolitical headlines for signals that could alter the currency’s trajectory.
Verbatim Quotes
- “A meaningful easing in pressure on these currencies (INR, IDR, PHP) would ?likely require a de-escalation in geopolitical risks, most notably a U.S.-Iran agreement that ensures transit through the Strait of Hormuz,” — MUFG, analyst note
- “The recent USD/INR rally could extend towards the 100 level should the Iran conflict persist ... That said, RBI intervention and the possibility of rate hikes could offer intermittent support.” — MUFG, analyst note
- “ The Reserve Bank of India will do "whatever is required" to ensure orderly movement in the foreign exchange market, Governor Sanjay Malhotra said in a media interview.” — Sanjay Malhotra, RBI Governor
- “He added that, following its recent fall, the rupee has become undervalued, both in nominal as well as in REER (real effective exchange rate) terms.” — Sanjay Malhotra, RBI Governor
