The rupee rebounded 49 paise from its all-time closing low to settle at 96.37 against the U.S. dollar on Thursday (May 21, 2026) after crude oil prices retreated from elevated levels amid signs of easing geopolitical friction, alongside likely central bank intervention.

Forex traders said the rupee had gained after the recent geopolitical developments, but investors are still gauging the geopolitical risk and oil price sensitivity in the background.

The one-year forward market rate for the rupee touched the crucial 100/USD mark on Wednesday (May 20, 2026), indicating that currency markets are pricing in a weakening bias for the USD/INR pair over the next 12 months, forex traders said.

At the interbank foreign exchange market, the rupee opened at 96.25 against the dollar, then touched an early high of 96.05 and a low of 96.60 in intraday trade. At the end of Thursday's trading session, the rupee was quoted at 96.37, up 49 paise from its previous closing.

On Wednesday, the rupee hit a record low of 96.95 and later closed at 96.86, which was also a new closing low.

"This recovery follows a retracement in crude oil prices amid tentative signs of easing geopolitical friction, alongside active central bank intervention. Moving forward, investor focus will remain anchored on geopolitical developments and the upcoming RBI monetary policy review," said Dilip Parmar, research analyst, HDFC Securities.

Mr. Parmar further added that from a technical standpoint, spot USDINR is finding firm support at 95.74, while immediate resistance remains capped at 96.50.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.30, up 0.22%.

Brent crude, the global oil benchmark, was trading down 0.75% at $104.23 per barrel in futures trade.

"Rupee has been in the midst of a rapid and dramatic depreciation streak, falling by over 6 per cent in CY26 against the dollar and touching successive record lows," a report authored by Radhika Rao, senior economist and Philip Wee, senior FX strategist at DBS Bank, said.

"We have lifted our USD/INR forecasts into a 95-100 range for the rest of 2026," It added.

On the domestic equity market front, Sensex declined 135.03 points to settle at 75,183.36, while the Nifty settled on a flat note at 23,654.70. Foreign Institutional Investors offloaded equities worth ₹1,597.35 crore on a net basis on Wednesday, according to exchange data.