Mumbai: The Indian rupee on Monday fell to 86.86 in early trade on higher oil prices, strong dollar amid escalating Middle East tensions but a retreat in crude oil prices and RBI intervention helped cushion the losses. Inflows from anchor investors of HDB Financial also took the dollar down.
The domestic unit finally settled to five-month low of 86.78, down 23 paise from its previous close of 86.55 on Friday. Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors, “From tomorrow we have the HDB Financial IPO which should bring inflows and if oil demand is not there we may see some appreciation for the rupee. The range of 86.50 to 86.90 for tomorrow depending on how oil prices behave. The closing was weaker today mainly due to geopolitics but we may see some good inflows from tomorrow.” Meanwhile, India’s foreign exchange (forex) reserves jumped $ 2.294 billion in the week ending June 13, 2025 to reach $ 698.95 billion, according to the official data released by the Reserve Bank of India (RBI). Ram Singh, an external member of the monetary policy committee with the RBI in an interview said that he expects the country’s foreign-exchange buffer to help blunt the impact of inflation caused by rising crude and fertilizer prices. However, Singh warned that the Indian rupee could come under pressure due to the worsening geopolitical climate and recent outflows of $5 billion in foreign investment from the bond market.
According to Garima Kapoor of Elara Securities, if the Strait of Hormuz closure materializes and continues durably for a major part of FY26, oil prices will surge further and stay sustainably above USD 90/bbl levels. “This is likely to pose challenges for India’s macroeconomic outlook via external factors although macroeconomic stability remains solid. In the near term, the USD-INR can see 87+levels, although the dollar index remains soft. Brent higher by USD10/bbl could mean higher trade deficit for India by 20-30bps (as a percentage of GDP). On inflation, assuming there is a pass through of USD 10/bbl to pump prices (probability of which remains low), we expect 30bp direct and indirect impact of similar magnitude.”
