After closing at new lows for four consecutive sessions, the rupee recovered by 66 paise on Wednesday to close at Rs 90.37 to a dollar– the biggest single-day gain in two months. According to dealers, the Reserve Bank of India (RBI) stepped in with dollar sales to stem the steady depreciation and curb speculation.
The Indian rupee has appreciated almost 1% during the intra-day trade to a high of 90.09. Earlier in the week, the rupee breached the 91-mark for the first time on Tuesday. In fact, the currency has hit multiple record lows over the past week. The slide from 90 to 91 took less than two weeks.
Countering Speculation
“Without the RBI intervention, market speculation would have driven the rupee even weaker, with more short positions risking a slide to even 91.5-92. The RBI drew a clear line at 91 today (Wednesday) through its tactical intervention,” said Dhiraj Nim, economist & FX strategist, ANZ Bank.
He added that while the RBI is rightly allowing the rupee to weaken, a free run on the exchange rate remains out of question, especially because of speculation.
According to Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors LLP, the RBI would not have been comfortable with the sharp one-sided depreciation from 89 to 91 levels. “Moreover, many speculative positions were being created. Therefore, the RBI wanted to curb that speculative position and bring them down.”
FY26 Performance
With Wednesday’s movement, the year-to-date (YTD) depreciation of the rupee in the current financial year declined to 5.75% from 6.5% earlier. Over the past one month, the rupee fell almost 2%. It remains as the worst-performing currency in FY26 compared to its Asian peers.
The RBI has followed the similar way previously as well to cut the speculative positions. In October, it intervened aggressively and brought back the rupee to 87.99 from the 88.80 level.
Forex traders and analysts expect the currency to remain under pressure due to the absence of a trade deal and persistent outflows. “The market should stay calmer for a few days. However, we expect a gradual depreciation, especially if tariffs remain. Our forecast for the rupee is 90 by March, assuming seasonality plays out but then a gradual drift upwards,” said Nim.