The Indian Rupee depreciated by 7 paise to reach 95.68 against the US Dollar, driven by rising Brent crude prices and the RBI's unexpected closure of the FCN (B) forex-swap facility.
- Rupee fell 7 paise to open at 95.68 against the USD.
- Brent crude rising toward $91/barrel increased dollar demand for oil imports.
- RBI's early closure of the concessional FCN (B) swap facility sparked inflow concerns.
- FIIs offloaded equities worth ₹2,535.10 crore on Monday.
The Indian Rupee witnessed a decline of 7 paise, opening at 95.68 against the U.S. dollar in early trade on Tuesday, August 18, 2026. This depreciation follows a sharp 19-paise drop on Monday, indicating a persistent bearish trend for the domestic currency amid global headwinds.
Forex analysts attribute the slide to the surge in Brent crude prices, which are currently trading around $91.34 per barrel. Since India imports a vast majority of its oil, higher prices necessitate a greater outflow of dollars, thereby weakening the rupee. Furthermore, the Reserve Bank of India's (RBI) decision to terminate the concessional FCN (B) forex-swap facility earlier than anticipated has raised alarms regarding future dollar liquidity.
Why This Matters
BozokMedia analysis shows that the rupee is currently caught in a pincer movement between rising commodity costs and geopolitical volatility. The ongoing friction between the U.S. and Iran over the Strait of Hormuz has stalled peace negotiations, keeping oil markets on edge. This volatility directly impacts India's current account deficit and inflationary pressures.
"The Rupee looks vulnerable to rising oil prices. While the RBI may attempt to defend the 95.75 level, the consistent demand from oil companies will likely drive further depreciation." - Anil Kumar Bhansali, Finrex Treasury Advisors.
The domestic equity markets mirrored this instability. The Sensex dropped 278.32 points to 77,450.64, while the Nifty fell 57.65 points to 24,230.45. The sentiment was further dampened by Foreign Institutional Investors (FIIs), who withdrew a net sum of ₹2,535.10 crore from the Indian markets on Monday.
| Indicator | Current Value | Change |
|---|---|---|
| USD/INR | 95.68 | -7 Paise |
| Brent Crude | $91.34 | +0.52% |
| Dollar Index | 99.63 | -0.01% |
Frequently Asked Questions
Q1: Why does rising oil price lead to a rupee fall?
A: India imports most of its oil in dollars. When prices rise, India needs more dollars to buy the same amount of oil, increasing the demand for USD and lowering the value of INR.
Q2: What is the role of the RBI in currency fluctuations?
A: The RBI intervenes in the forex market by buying or selling dollars from its reserves to prevent extreme volatility and ensure stability in the exchange rate.
