Indian Rupee Eases Despite Lower Oil Prices Ahead of US Employment Data

VG Markets · 2026-07-02T09:18:48Z
Indian Rupee Eases Despite Lower Oil Prices Ahead of US Employment Data

The Indian Rupee traded slightly weaker on Thursday, with USD/INR moving back toward 95.30, despite support from lower oil prices and improving diplomatic developments in the Middle East.

Several factors, including declining crude oil prices, reported market intervention by the Reserve Bank of India (RBI), and progress in regional diplomatic discussions, were generally viewed as supportive for the rupee. However, continued foreign portfolio outflows limited gains in the local currency.

MCX crude futures for July delivery fell around 1% to a multi-month low near ₹6,450, following Brent crude's decline toward US$73 per barrel. According to Qatar's Foreign Ministry, recent discussions involving regional mediators made progress on issues related to the memorandum of understanding between the United States and Iran. Further diplomatic discussions are expected to continue in the coming weeks.

Lower oil prices generally reduce India's import costs and are often viewed as supportive for the rupee because the country imports the majority of its crude oil requirements. Reuters also reported that the Reserve Bank of India was seen selling US dollars in the market to help smooth currency volatility.

Meanwhile, Foreign Institutional Investors (FIIs) remained net sellers of Indian equities at the start of July. Market participants also continued to focus on the upcoming US Nonfarm Payrolls report, which is expected to provide additional guidance for Federal Reserve policy expectations. According to CME FedWatch data, markets continued to assign a high probability to at least one additional interest rate increase later this year, which could continue to support the US Dollar relative to emerging-market currencies.

From a technical perspective, USD/INR traded above its 20-day Exponential Moving Average (EMA), while the Relative Strength Index (RSI) remained near 55, indicating neutral-to-positive momentum. Resistance is located near the July 1 high around 95.52, while initial support remains close to 94.85. A sustained move above resistance could shift market attention toward 96.30, whereas a move below support could bring focus back to the broader support area near 93.99.

Sources: Reuters, CNN, Qatar Foreign Ministry, CME Group FedWatch, Multi Commodity Exchange (MCX). This article is provided for informational purposes only and does not constitute investment advice.