Rupee ended nearly flat on Monday as modest gains spurred by ​flows connected toMSCI's equity index rebalancing were eroded by persistent hedging demand ‌from corporates, while traders kept their focus firmly on ​the upcoming monetary policy decision.

The rupee ⁠closed at 94.99 per dollar, almost unchanged from its close at 95.00 on Friday.

The currency gained in early trading on the back ‌of concurrent dollar sales from foreign and state-run banks, but activity faded in the latter half of ‌the session, a private sector bank trader said.

In ‌the ⁠near-term, the rupee is likely to be rangebound between ⁠94.50-96 with intra-day flows dictating price action, a trader at a state-run bank said.

The flow impulses subdued the impact of higher crude oil prices ​on the rupee, traders ‌said. Brent crude oil futures rose about 3% to $93.8 per barrel.

The U.S. said it struck Iranian military sites at the weekend and Iran's Revolutionary Guards said on ‌Monday it had targeted a U.S. base in response, ​the latest in a series of exchanges amid negotiations to end the three-month-old war.

The U.S. and ⁠Iran have sporadically exchanged strikes since their ceasefire took effect in early April, as negotiations aimed at a more durable ‌agreement drag on.

Amid the challenging backdrop for net energy importers like India, traders are keeping their focus on the central bank's monetary policy decision and commentary due Friday.

"Markets continue to challenge RBI's slightly dovish policy guidance. RBI is focused heavily on domestic factors currently, primarily inflation outlook while ‌keeping an eye on growth risks," analysts at BofA Global Research ​said in a note.

"However, the market prices larger and faster pace of rate hikes based on ⁠assumption of a shift in RBI's reaction function towards FX stability."

The ⁠firm recommends receiving 1-year INR non-deliverable overnight index swaps to fade extreme market pricing of rate-hikes in the ‌front-end, against the possibility of a delayed hiking cycle as RBI awaits additional data unreactive with its policy ​repo rate tool to FX market pressures.

Published on June 1, 2026