A day after crossing 91 to the dollar mark and hitting an all time low, the rupee made a smart recovery on Wednesday aided by RBI intervention in the forex market.
The development also comes a day after RBI bolstered its ability to intervene in the market by absorbing $5 billion from market participants via a three-year USD/INR buy-sell swap.
The Indian currency is currently trading at 90.3475 per USD against the previous close of 91.0275.
Abhishek Goenka, Founder & CEO, IFA Global, said the rupee saw a sharp intraday recovery today, strengthening from levels near ₹91.05 to around ₹90.00, aided by timely intervention from the RBI.
“The central bank stepped in to curb excessive volatility and prevent a disorderly move, signalling its discomfort with rapid depreciation beyond recent ranges,” Goenka said.
“While the broader bias for USD-INR remains influenced by trade deal and capital flow dynamics, today’s action reinforces the RBI’s role as a stabiliser rather than a defender of fixed levels,” he said.
Amit Pabari, MD, CR Forex Advisors, said: “The US Federal Reserve has begun buying $40 billion worth of Treasury bills every month, adding more liquidity to the system following its recent policy meeting. More liquidity usually means a softer currency — and that dynamic is starting to show….The rupee’s recent fall is being driven mainly by trade uncertainty and foreign investor outflows, rather than domestic weakness. With the dollar also under pressure, any progress on trade talks could quickly help stabilise sentiment.”