The Indian rupee broke its prolonged losing streak and rebounded on Thursday, closing at 89.97/$—up 0.24% from its previous close of 90.19 against the US dollar.
The currency’s recovery came on the back of likely dollar selling by multiple foreign banks, a decline in the dollar index, and reports of possible intervention by the Reserve Bank of India (RBI). On Wednesday, the rupee had breached the psychologically crucial 90/$ mark due to the stalled trade deal with the US and continued foreign investor outflows from equities.
On the day, dollar sales from foreign banks picked up in the latter half, which alongside likely selling interest in the non-deliverable forwards market helped the rupee recover, Reuters quoted traders as saying.
Commenting on the currency’s movement, Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, said, “The rupee traded positive with gains of 0.28 paise at 89.91 as markets await the RBI policy on Friday, especially after the currency hit all-time lows this week. Participants remain cautious with the rupee in focus ahead of the policy outcome. The currency will also track the US Core PCE Price Index due Friday, which could influence dollar movement.”
On Thursday, the US released key economic data indicating a slowdown in the labour market, which further weighed on the dollar.
Rupee expected to stage recovery by 2026
In its latest report, Elara Capital said the weakness in the rupee is driven largely by temporary factors. The brokerage expects the currency to strengthen to 88–88.50 per dollar by the end of 2026.
Analysts at Elara Capital further expect the RBI to play a more active role in the forex market as liquidity conditions ease. The central bank has already injected about Rs 2 trillion through open market operations (OMOs), creating additional room for intervention to stabilise the currency if required.
CEA on rupee’s slide to 90/$ level
Chief Economic Advisor V. Anantha Nageswaran on Wednesday also reiterated hopes of the rupee recovering next year, saying the government is “not losing sleep” over the currency movement. He added that the depreciation is not impacting inflation or exports and that the rupee should improve by next year.
RBI MPC: Will There Be a Rate Cut?
The RBI’s Monetary Policy Committee (MPC) meeting, currently underway, is expected to address concerns over the rupee’s depreciation. Experts, however, remain divided on whether the central bank will announce a 25-basis-point rate cut, given the recent volatility in the currency.