The Indian rupee edged higher against the US dollar amid softer dollar sentiment, easing oil prices, and favourable foreign portfolio flows, as markets await the Reserve Bank of India’s upcoming policy review.
The rupee inched higher in early trade on Tuesday, opening almost unchanged before firming to 95.34 against the US dollar, as softer greenback sentiment and weaker oil prices offset demand for dollars from importers. Traders said improving global risk appetite and continued foreign portfolio inflows into Indian equities also helped support the currency.
At the interbank foreign exchange market, the unit opened at 95.35 and briefly touched 95.34, compared with Monday’s close of 95.47. Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said the rupee could stay in a narrow band of 95 to 95.50 as markets wait for the Reserve Bank of India’s policy decision on Wednesday and key US data later this week. He added that the dollar index has slipped below the psychologically important 100 level as investors increasingly expect a more accommodative Federal Reserve stance after softer US inflation readings.
Brent crude was trading higher on the day at $84.73 a barrel, but remained well below the peaks seen in July, when prices topped $100. Bhansali said the broader decline in oil reflected easing tensions in the Middle East, expectations of higher OPEC+ output and adequate global supply. A recent Reuters-style report from market participants also noted that the RBI has remained active in the foreign exchange market, a move that tends to smooth volatility and steady sentiment.
The latest move comes as the RBI prepares for its monetary policy review, with the central bank having left the repo rate unchanged at 5.25% in February and keeping a neutral stance. In August 2025, it had also held the benchmark rate at 5.5% before cutting inflation projections later in the year as price pressures eased. On the domestic market, the Sensex was higher in early trade while the Nifty slipped, and exchange data showed foreign investors bought Indian shares worth ₹922.26 crore on Monday.
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