The Indian rupee continued its upward trajectory this week, riding on a wave of positive sentiment from both domestic and global factors. On Monday, the currency opened stronger at 82.95 against the US dollar, up from the previous close of 83.12, as traders anticipated the Reserve Bank of India’s (RBI) monetary policy decision and key US jobs data. The rupee’s momentum was further fueled by growing optimism that the United States and Iran may reach a diplomatic agreement over Tehran’s nuclear program, a development that could ease global crude oil prices.
On Tuesday, the rupee traded at 82.85 per dollar, marking its third consecutive session of gains. The prospect of a US-Iran deal pushed Brent crude futures below $85 per barrel, down from recent highs above $90, as markets priced in the potential return of Iranian oil supply. India, the world’s third-largest oil importer, stands to benefit significantly from lower crude costs, which would reduce its import bill and improve the current account deficit.
Domestically, the RBI’s Monetary Policy Committee is widely expected to hold the repo rate steady at 6.50% when it announces its decision on Wednesday. A status-quo stance, coupled with cautious optimism on growth, could further support the rupee. Meanwhile, foreign portfolio inflows into Indian equities and debt have picked up, adding to the currency’s strength.
Later in the week, the US nonfarm payrolls report will be a critical test. Economists expect around 180,000 new jobs and an unchanged unemployment rate of 3.8%. A softer-than-expected reading would reinforce the view that the Federal Reserve is done hiking rates, potentially weakening the dollar and lifting emerging market currencies, including the rupee. Conversely, a strong report could revive tightening fears and cap the rupee’s gains.
For Indian consumers, a stronger rupee helps contain imported inflation, particularly for fuel and electronics. However, export-oriented sectors like IT services and textiles may face margin pressures. Analysts suggest that the rupee’s near-term trajectory hinges on the outcomes of the RBI meeting and the US jobs data, with support seen at 82.50 and resistance around 83.50.
