The Indian rupee strengthened against the US dollar on Friday after the Reserve Bank of India (RBI) moved to limit spot dollar purchases by oil refiners, pushing the USD/INR pair down to around 92.70–92.80, its lowest level in recent sessions.
RBI moves to ease forex pressure from oil demand
The RBI on Thursday activated a special dollar credit facility for state-owned oil companies and urged them to use this window instead of buying dollars directly in the spot market, according to a Reuters report.
The step is aimed at easing persistent dollar demand from large energy importers, which has been a key source of pressure on the rupee. The currency has strengthened about 0.51% over the past month, but remains roughly 8.5% weaker over the past year.
The same facility was previously used during the Russia–Ukraine conflict to channel dollar funding to refiners without amplifying spot market demand.
Broader tightening of foreign exchange rules
The credit line follows earlier measures in March, when the RBI instructed banks to cap their daily open rupee positions at $100 million. The central bank has also tightened rules on derivatives, part of a broader push to curb volatility in currency markets and manage speculative flows.
Oil price retreat offers added support to rupee
Global crude prices have eased from recent peaks, with oil hovering near $90 a barrel after briefly trading above $100 earlier in the month. Brent crude, the international benchmark, was quoted near $98.19 per barrel.
Softer energy prices tend to support net oil importers such as India by reducing the country’s import bill and associated dollar demand, lending additional support to the rupee.
Geopolitics and risk sentiment
Market risk appetite improved after US President Donald Trump said Iran appeared willing to curb its nuclear programme and that Washington and Tehran were moving toward a possible agreement. He added that the US remained prepared to resume military action if talks broke down.
A two-week ceasefire between the US and Iran, in place since April 8 and mediated in part by Pakistan, has been closely watched by global markets and has helped to temper fears of further escalation in the region.
Dollar softens as risk appetite rises
The US dollar’s safe-haven appeal weakened as traders shifted toward riskier assets, even though the US Dollar Index edged slightly higher to around 98.25. The index remains on course for a losing week as demand for haven assets eases.
Foreign flows into Indian equities stabilise
Foreign institutional participants have cautiously increased exposure to Indian equities following the ceasefire announcement.
After heavy selling earlier in the month, when foreign participants offloaded around ₹48,213 crore in April so far and roughly ₹1.6 lakh crore over a 25-session stretch from March 2 to April 9, buying has resumed at the margin.
In the last two sessions, they purchased Indian shares worth ₹1,048.51 crore, modestly offsetting the earlier outflows and contributing to improved sentiment around local assets.
Technical picture: short-term bias still bearish for USD/INR
On the charts, USD/INR is trading below its 20-day exponential moving average at 93.06, maintaining a short-term bearish bias for the pair.
The Relative Strength Index stands at 48.6, just below the neutral 50 mark, indicating fading upward momentum in the dollar-rupee pair but not yet signaling oversold conditions.
Immediate resistance is seen near 93.07. A sustained move above this level would be needed to ease downside pressure and reopen a path toward the recent highs above 95.00.
As long as USD/INR stays below 93.07, analysts see scope for further rupee strength, with the pair potentially drifting toward the March 3 high near 92.46 on weaker sessions.
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