The Indian rupee opened slightly weaker on Friday, declining by 5 paise to ₹90.96 against the US dollar, as global risk appetite remained fragile and traders refrained from taking aggressive positions ahead of potential central bank action. The currency had settled at ₹90.91 in the previous session, indicating continued pressure but no sharp dislocation.

This week, the rupee has traded in a notably narrow band, suggesting an equilibrium between dollar demand from importers and suspected intervention by the Reserve Bank of India (RBI). Market participants widely believe the central bank has been active in the foreign exchange market to prevent a breach of the ₹91 per dollar level a threshold often viewed as both psychological and policy-sensitive.

According to traders, importers have stepped up hedging activity amid uncertain global conditions and elevated commodity prices. Such hedging increases demand for dollars, which tends to weaken the domestic currency. At the same time, exporters appear less aggressive in selling dollars at current levels, limiting supply in the market.

Technical indicators reinforce the view of a controlled depreciation. Market participants note that the ₹90.60–₹90.80 zone in the USD/INR pair continues to act as a strong support region. As long as this band holds, the broader directional bias remains upward for the dollar, implying downside risk for the rupee. Analysts also expect the currency to remain range-bound in the near term, especially if the RBI continues to smooth volatility.

Globally, sentiment remains cautious. Investors are digesting changes in United States tariff policies, which have raised concerns about potential disruptions to global trade flows. Such developments typically strengthen the dollar as investors seek safety in reserve currencies. Simultaneously, Brent crude oil prices have stayed elevated due to geopolitical tensions involving the US and Iran, further complicating the outlook for oil-importing economies like India.

Higher crude prices directly pressure the rupee because India imports a significant share of its energy requirements. Rising oil costs increase the country’s import bill, widening the trade deficit and boosting demand for dollars. Historically, sustained spikes in crude prices have coincided with periods of rupee weakness, particularly when accompanied by global risk aversion.

The RBI’s approach appears to be focused on preventing disorderly depreciation rather than defending a specific level. By supplying dollars intermittently, the central bank can reduce volatility without exhausting reserves. This strategy helps maintain investor confidence while allowing gradual currency adjustment in line with fundamentals. More details on currency movements and central bank policy can be found here https://www.rbi.org.in.