The Indian rupee slipped on Friday and was on course for an over 1% weekly drop, as oil prices held above $100 per barrel, while dollar sales by state-run banks helped the currency avoid a record low, traders said.
The rupee fell 0.2% to 95.94, hovering near its record low of 95.9575 hit in the previous session.
Brent oil prices gained more than 1% to $107 per barrel after U.S. President Donald Trump said he would not be "much more patient" with Iran.
The more than five-week ceasefire between the U.S. and Iran remains fragile, with neither side appearing close to a deal to end the war.
Pressure from elevated oil prices was compounded by higher U.S. bond yields on Friday. The 10-year U.S. bond yield rose to 4.53%, its highest in a year, as concerns over energy-driven inflation fuelled bets of a Federal Reserve rate hike this year.
Earlier on Friday, India raised petrol and diesel prices for the first time in four years by more than 3%, becoming one of the last major economies to hike retail fuel prices.
Indian interest rate swap markets are currently pricing in about 90 bps worth of rate hikes over the next 12 months.
"Having implemented measures to contain non-essential consumption to limit import bill and conserve foreign exchange, we expect policymakers to continue with these measures and additionally announce steps to encourage foreign capital inflows," economists at Barclays said in a note. The firm expects the RBI to keep rates unchanged over 2026.
Multiple media reports in recent days outlining possible steps to boost dollar inflows have provided momentary relief to the rupee, even as the underlying trend of weak dollar inflows keeps the depreciation trend intact.
Investors are also awaiting India's merchandise trade data for April due to be released later on Friday.
