Indian Rupee hits 3-month low as Brent crude surges and US bond yields breach 5%

By ET BureauLast Updated: Sep 16, 2026, 05:54:00 AM IST

Synopsis

The Indian rupee reached its weakest point in three months on Tuesday. This depreciation occurred as Brent crude oil prices surged past $108 per barrel. US 10-year bond yields also breached the significant 5% mark. The Reserve Bank of India intervened by selling dollars to support the currency. Future rupee movement will depend on oil prices and the US Federal Reserve's policy decision.

Mumbai: The Indian rupee on Tuesday closed at its weakest level in nearly three months as Brent crude oil leapt to more than $108 per barrel and US 10-year bond yields breached the 5% mark, a rarity this millennium. The currency closed at 95.95, versus its previous close of 95.55, with the Reserve Bank of India (RBI) selling dollars at weaker levels, traders said.

"The rupee has come under renewed pressure today after a sharp rise in domestic and global bond yields. Brent crude remained elevated above $108 levels, adding to India's import-dollar demand," said a trader from a private sector bank. The currency traded in a narrow range of 95.96 and 95.75, while dollar demand from oil companies kept the currency under continuous pressure.

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Trader focus will now be on whether the RBI will continue to defend the currency near 95.59-96 levels. A consistent move above 96 per dollar levels leaves the currency open for 96.10-96.20, traders said. "We are forecasting USD/INR at 95.50 by Dec 2026 and 96.50 by June 2027, implying a gradual depreciation in INR and a modest underperformance against other Asian currencies," said MUFG bank in a note on Tuesday. Focus will now be on oil prices, which will determine the trajectory of the rupee.

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Focus will also be on the US Federal Reserve's policy decision on Wednesday with markets pricing a 93% chance of a hike, according to CMEs FedWatch Tool.

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