Rupee's RBI-spurred relief rally to fade on Asia FX weakness, hedging

The Indian rupee is poised to weaken at Friday's open, mirroring declines ​in Asian peers and showing little follow-through to the central ‌bank's intervention-driven rally.

The rupee is seen opening near ​96.30 to the U.S. dollar on Friday, ⁠per traders, after settling at 96.20 on Thursday when it climbed 0.64%.

The currency snapped its losing streak on ‌Thursday, driven largely by aggressive pre-market dollar selling from the Reserve Bank of India that ‌continued through the session, according to traders.

The rupee ‌had ⁠declined 2.5% over the previous nine days ⁠and was at risk of slipping to 97 for the first time before the intervention.

Markets will be watching whether the RBI ​follows up with another round ‌of intervention, a currency trader at a bank said.

Such follow-through has at times been used in the past to reinforce the central bank’s ‌discomfort with further rupee depreciation, he added.

He said ​that the rupee would otherwise likely come under renewed pressure, noting that dips in ⁠dollar/rupee have been difficult to sustain and tend to spur higher importer hedging interest.

WEAK ASIA

The rupee will ‌have to contend with weakness in most Asian peers, while drawing a measure of support from the pullback in oil. The dollar index held near a six-week high.

Focus remained firmly on U.S.-Iran headlines for cues on progress in resolving the conflict. Washington ‌and Tehran continued to hold opposing positions on Iran’s uranium stockpile ​and control of the Strait of Hormuz, although U.S. Secretary of State Marco Rubio ⁠noted there had been “some good signs” in talks.

"It remains unclear ⁠whether a breakthrough is imminent," MUFG Bank said in a note, while noting that ‌tentative optimism around a potential agreement was supporting risk sentiment.

U.S. equities rose on Thursday, with futures ​indicating the upward momentum could extend.

Published on May 22, 2026