The rupee traded in a narrow range against the U.S. dollar on Monday, October 5, 2026. It hovered near the 96 mark as high oil prices and foreign fund outflows weighed on the market. Forex traders said, "dollar buying by oil companies will continue while FPIs will continue to remain in sell mode."
The rupee traded in a narrow range against the U.S. dollar in early trade on Monday (October 5, 2026), and was hovering around the crucial 96 mark, amid persistent pressure from elevated crude oil prices and sustained foreign fund outflows.
Forex traders said periodic dollar interventions by the Reserve Bank of India (RBI) helped smooth excessive intraday volatility and capped sharper losses for the rupee, though the overall macro environment of elevated import bills and persistent greenback strength weighed on investor sentiment.
Rupee rises 13 paise to close at 95.81 against U.S. dollar
At the interbank foreign exchange market, the rupee opened at 96.20, then fell to 96.26 against the U.S. dollar, registering a fall of 1 paisa from its previous close.
On Thursday (October 1, 2026), the rupee slumped below the psychologically important 96-per-dollar mark to close at 96.25 against the U.S. dollar. Forex and equity markets were closed on Friday (October 2, 2026), on account of Mahatma Gandhi's birth anniversary.
"The rupee closed at its weakest in over two months, and carries an upward bias for the pair within 95.50-96.50, on oil above $100, U.S. yields at multi-year highs and heavy foreign portfolio selling," said Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities.
The Reserve Bank has been active, the $18 billion fall in reserves, to $748 billion, reflects the scale of that defence, and the Monetary Policy Committee meets this week, with most economists expecting a 25-basis-point increase, to 5.50%.
Rupee slumps 37 paise to close at 96.31 against U.S. dollar
The triggers for the USD/INR pair are U.S. services data, the Fed minutes and the RBI's decision on Wednesday (October 7, 2026), and any Saudi confirmation of weekend damage. A Fed pause in October and an RBI rate hike are priced in; confirmed damage to Saudi infrastructure is not, and would move Brent towards the top of its range quickly, Mr. Banerjee added.
Meanwhile, the Dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 102.47, higher by 0.54%.
Brent crude, the global oil benchmark, was trading lower by 0.89% at $101.34 a barrel in futures trade.
"Though we wait for RBI action on the rupee, dollar buying by oil companies will continue while FPIs will continue to remain in sell mode...," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
On the domestic equity market front, the Sensex rose 413 points to 72,315 in early trade, while the Nifty was trading 131.55 points higher at 22,554.20.
Foreign Institutional Investors (FIIs) offloaded equities worth ₹9,484.22 crore on a net basis on Thursday (October 1, 2026), according to exchange data.
Meanwhile, India's forex reserves dropped $18.343 billion to $747.557 billion during the week ended September 25, 2026, the Reserve Bank said on Friday (October 2, 2026). In the previous reporting week, the reserves had declined $14.881 billion to $765.901 billion.