Rupee Sees Strongest Gain in Over Two Weeks on Likely RBI Intervention

The Indian rupee recorded its sharpest appreciation in more than two weeks on Monday, lifted by what traders believe was an intervention by the Reserve Bank of India (RBI) in the offshore non-deliverable forward (NDF) market. The move brought much-needed relief to the local currency, which had been under pressure in recent weeks due to broader weakness across Asian currencies.

RBI Steps In to Support the Rupee

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In early trade on November 4, the rupee strengthened by 22 paise—its biggest single-day gain since 16 October. The local currency opened 39 paise higher at 88.3925 against the U.S. dollar, compared with Friday’s close of 88.7813.

A treasury head at a public sector bank said that the RBI had likely intervened in the NDF market before the domestic spot market opened. “RBI intervened in the NDF market before the spot market opens,” the banker said, hinting that the central bank’s action helped stabilise the currency’s movement at the start of the trading day.

The NDF market, which operates offshore, allows trading of the rupee without actual delivery and is often used by foreign investors and traders to hedge exposure. By stepping in before spot trading begins, the RBI can influence sentiment and prevent sharp fluctuations in the rupee’s value.

Domestic Indicators Remain Strong

Adding to the upbeat sentiment, India’s latest Goods and Services Tax (GST) collections highlighted continued resilience in domestic demand. According to Amit Pabari, Managing Director at CR Forex Advisors, GST collections rose 4.6 percent year-on-year to ₹1.96 lakh crore in October.

“The steady growth in GST revenues shows firm consumption trends and reflects healthy tax buoyancy,” said Pabari. “This signals that domestic fundamentals remain strong, even as global uncertainties weigh on emerging market currencies.”

Robust consumption and tax performance have helped India maintain relative macroeconomic stability, supporting investor confidence in the rupee.

Portfolio Inflows Add to Positive Momentum

Market focus has now shifted to portfolio flows, with two major public offerings in the spotlight. The initial public offering (IPO) of eyewear brand Lenskart closes for bids on Tuesday, while fintech firm Groww opens its $754 million share sale the same day.

Both are expected to attract strong investor interest, potentially leading to fresh foreign portfolio inflows. “Strong inflows through these large issues could provide short-term support to equities and, in turn, lend stability to the rupee,” Pabari added.

These portfolio movements often have a direct impact on currency trends, as foreign investors bring in or repatriate dollars based on their investment activity in Indian markets.

Outlook: Rupee Likely to Stay Range-Bound

Despite the rupee’s strong showing, analysts expect it to remain range-bound in the near term. Dilip Parmar, Foreign Exchange Analyst at HDFC Securities, predicted that the USD/INR pair would likely trade between 88.30 and 89.25 through November.

“The RBI’s interventions, combined with steady domestic indicators and portfolio inflows, could help limit volatility,” Parmar noted. However, he added that external pressures—such as a stronger U.S. dollar and weakness in other Asian currencies—could cap further appreciation.

A Temporary Boost or Sustained Stability?

While Monday’s rally provided some respite for the rupee, sustained strength will depend on how global market dynamics evolve in the coming weeks. The RBI’s proactive measures, healthy domestic data, and improving foreign inflows have together given the currency a temporary boost.

For now, traders and analysts agree that the central bank’s quiet but firm hand in the NDF market remains a key factor in maintaining rupee stability amid global headwinds.