The rupee appreciated sharply by 61 paise to close at 95.92 (provisional) against the U.S. dollar on Monday (July 27, 2026), driven by a steep correction in crude oil prices after the U.S. and Iran paused the war in West Asia, triggering hopes of easing global trade tensions.

According to Forex traders, the local currency also found support from a firm trend in domestic equities and weakness in the U.S. Dollar against major currencies.

At the interbank foreign exchange, the rupee opened at 96.18 and touched the low of 96.27 and the high of 95.78 against the greenback during the session. The local unit finally settled at 95.92 (Provisional) against the dollar, up 61 paise compared to its previous closing level.

On Friday (July 24, 2026), the rupee recovered from its record low levels to settle 20 paise higher at 96.53 against the U.S. Dollar. The Rupee’s all-time low closing level of 96.86 was recorded on May 20.

Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, said the rupee strengthened to the highest levels in three weeks as the U.S. and Iran halted strikes after two weeks of escalation.

“Falling crude oil prices and the softening of the U.S. Dollar also favoured the rupee. Reports of intervention by the RBI also supported the rupee,” Mr. Choudhary said, adding, “The USD-INR spot price is expected to trade in a range of ₹95.50 to ₹96.20”.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.20% lower at 101.09.

Brent crude, the global oil benchmark, declined 8.95% to $88.12 per barrel in futures trade as the U.S. and Iran halted attacks and hinted at moving on to a negotiation table.

U.S. President Donald Trump is “giving talks some space”, Mike Waltz, the U.S. ambassador to the United Nations, told a news channel.

“He’s giving it a little bit of room,” Mr. Waltz said, adding, “We’ve had both Oman and Iran, and a number of our other negotiators, engaged at every level, from the most senior levels all the way down to the technical level over the past few weeks, and particularly in the past few days.”

On the domestic equity market front, Sensex surged 776.01 points, or 1.02%, to settle at 76,835.78, while the Nifty gained 228.50 points, or 0.96%, to 23,995.95.

Foreign Institutional Investors offloaded equities worth ₹3,892.77 crore on a net basis on Friday (July 24, 2026), according to exchange data.

Foreign investors have pulled out ₹11,820 crore ($1.3 billion) from Indian equities in the first week of December, primarily driven by the sharp depreciation of the rupee.

This sharp withdrawal follows a net outflow of ₹3,765 crore in November, further pressuring markets.

These outflows come after a brief pause in October, when Foreign Portfolio Investors (FPIs) invested ₹14,610 crore, breaking a three-month streak of massive withdrawals — ₹23,885 crore in September, ₹34,990 crore in August and ₹17,700 crore in July.

According to NSDL (National Securities Depository Limited) data, FPIs withdrew a net amount of ₹11,820 crore from Indian equities in the first week of December. This takes the total outflow for 2025 to ₹1.55 lakh crore ($17.7 billion).

Analysts attribute the renewed selling primarily to currency concerns.

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The rupee has depreciated nearly 5% this year, prompting FPIs to pull out during such periods, said V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments.

Adding to this, year-end portfolio repositioning by global investors, a typical December trend before the holiday season, has also intensified selling, noted Vaqarjaved Khan, Senior Fundamental Analyst at Angel One.

“Delays in finalising the India-U.S. trade deal have further dampened global sentiment,” Mr. Khan said.

However, despite the FPI exodus, the impact on markets has been cushioned by strong domestic participation. Domestic Institutional Investors (DIIs) bought equities worth ₹19,783 crore during the same period, completely offsetting the foreign selloff, Mr. Vijayakumar said.

DII confidence has been supported by India’s robust GDP numbers and expectations of an improvement in corporate earnings ahead.

The sentiment received an additional boost after the RBI’s 25 bps rate cut on December 5, when FPI flows turned positive for the day at ₹642 crore.

This shift was significant, considering FPIs had sold nearly ₹13,000 crore by December 4.

“The RBI not only reduced rates but also raised its FY26 growth guidance to 7.3%, while cutting its CPI forecast to 2%. A strong growth environment augurs well for Indian equities,” Khan said.

“Looking ahead, global liquidity may get another lift. The CME Fed Watch Tool indicates that the Federal Open Market Committee [FOMC] is expected to cut rates by 25 bps next week, a move that typically benefits risk assets worldwide,” he said.

“India could be a key beneficiary, though the absence of a concluded India-U.S. trade deal remains a risk factor”, he added.

Meanwhile, in the debt market, FPIs invested ₹250 crore under the general limit while withdrawing ₹69 crore through the voluntary retention route during the same period.