The rupee fell 17 paise to 95.43 against U.S. dollar in early trade on Tuesday (May 26, 2026), as month-end dollar demand and elevated crude oil prices weighed on investor sentiments.

Forex traders said the broader pressure on the rupee is likely to continue as long as geopolitical tensions remain elevated. Moreover, Reserve Bank of India (RBI) measures and liquidity support may help provide temporary relief and contain volatility in the near term, they said.

Why is the Indian Rupee falling?

At the interbank foreign exchange market, the rupee opened at 95.43 against the U.S. dollar, down 17 paise from its previous close.

On Monday (May 25, 2026), the rupee gained 34 paise to close at 95.26 against the U.S. dollar with the RBI selling dollars and keeping the rupee well bid at all upper levels.

Meanwhile, Brent oil prices rose after they touched $93 per barrel with reports of fresh attacks against Iran offsetting hopes of a deal to reopen Strait of Hormuz.

U.S. President Donald Trump on Monday (May 25, 2026) said negotiations with Iran to end the war were progressing "nicely", but officials pointed out that a final decision may take some time due to the complex communication networks Tehran deploys to consult with its supreme leader.

"With RBI on the prowl the speculative pressure against the rupee has come down significantly and a better risk appetite in equities has kept rupee firmer against the dollar," said Anil Kumar Bhansali head of treasury and executive director, Finrex Treasury Advisors Limited Liability Partnership (LLP).

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.04, down 0.19%.

Brent crude, the global oil benchmark, was trading up 1.84% $97.91 per barrel in futures trade.

Brent oil moved up after a fall on Monday (May 25, 2026) after reports that U.S. had carried fresh attacks against Iran offsetting hopes of a deal to reopen the Strait of Hormuz.

"Reports on Monday [May 25, 2026] evening indicated that U.S. had launched fresh strikes against missile launch sites and mine laying boats taking oil a bit higher despite talks being held with Iranian authorities. This could complicate the ongoing peace negotiations," Mr. Bhansali said.

On the domestic equity market front, Sensex declined 264.82 points to 76,224.14 in opening trade, while the Nifty dipped 27.6 points to 24,004.10.

Foreign institutional investors turned net buyers and purchased equities worth ₹821.75 crore on Monday (May 25, 2026), according to exchange data.