Rupee strengthened as oil prices dropped on hopes of a US-Iran deal and on comments by the central bank Governor that the currency may be undervalued.

The rupee rose 0.4% to 95.3425 per dollar on Monday, joining a broader rally in regional currencies as Brent crude fell below $100 a barrel. The currency has gained around 1.5% over the past three trading sessions through today, with the part of the rise fueled by central bank interventions. 

The currency may now be undervalued following its recent slide versus the dollar, Reserve Bank of India Governor Sanjay Malhotra said in an interview with the Mint newspaper. The rupee is down 5.8% so far this year pressured by record foreign outflows from local stocks as the oil price shock caused by the war strains India’s external finances. 

A gauge of the rupee’s competitiveness against other currencies stood at 90.96 in April, the lowest since at least 2014, according to Bloomberg-compiled data. That shows the currency is undervalued against peers. 

“It is unusual for the RBI Governor to provide a view on the rupee’s valuation but in times of crisis like this, it gives a positive trigger after one-sided depreciation in the currency,” said Ritesh Bhansali, deputy chief executive officer at Mecklai Financial Services Ltd. He expects the currency to gain to 93.50-94 in the event of the US and Iran announcing a fresh ceasefire.

The RBI has taken aggressive measures over the past couple of months to quell speculation against the rupee, including a temporary clampdown on offshore market activity. The measures only provided a brief reprieve, with concerns over India’s reliance on expensive crude imports and persistent dollar outflows sapping the currency.

The RBI is considering all of its available options to stabilize the currency, including an interest rate hike, more currency swaps and raising dollars from investors overseas, Bloomberg News reported last week.

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Published on May 25, 2026