Rupee Stages Strong Comeback from Record Low on RBI Support and U.S. Trade Hopes

The Indian rupee witnessed its sharpest single-day rebound in nearly four months, recovering strongly from near-record lows on the back of likely central bank intervention and renewed optimism surrounding India-U.S. trade talks.

Rupee Records Biggest Jump Since June

After hitting a weak point of ₹88.80 per U.S. dollar on Tuesday, the rupee surged as much as 0.9% to ₹87.99 on Wednesday before trimming some gains. This marks its biggest intraday rise since June 24, as traders attributed the rally to heavy dollar-selling by the Reserve Bank of India (RBI).

Market participants believe the RBI sold dollars in both onshore and offshore markets, similar to its strong intervention seen in February this year. The move caught short-sellers by surprise and helped stabilise the currency, which had been under pressure for weeks.

Central Bank Intervention and Speculator Pushback

The RBI’s active stance has been evident in recent weeks, with traders noting its efforts to defend the ₹89-per-dollar mark. The central bank’s actions reflect a desire to prevent excessive volatility rather than chase a specific exchange rate level.

The intervention echoes the February episode when the RBI sold billions of dollars to counter speculative bets against the rupee. Since then, the currency has remained largely stable, indicating quiet but consistent support from the central bank.

According to Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors, “The RBI likely sold big amounts in the spot and offshore markets, leading to sharp gains in the rupee. The hope of a trade deal soon is also helping.”

Trade Negotiations and Global Market Sentiment Boost Rupee

Adding to the momentum, reports suggest that India aims to finalise trade negotiations with the U.S. by next month, which lifted investor sentiment. This optimism, coupled with a softer U.S. dollar amid expectations of Federal Reserve rate cuts, provided additional tailwinds for the Indian currency.

Market analysts noted that if the rupee manages to sustain levels below ₹88.10, it could strengthen further toward ₹87 per dollar. “The combination of trade optimism, RBI’s pushback, and a weaker dollar environment has clearly supported the rupee,” said Michael Wan, senior currency analyst at MUFG Bank.

The RBI, however, did not issue an official statement or comment on the intervention reports.

Outlook: Controlled Stability Expected Ahead

Experts believe that while the rupee’s recovery reflects short-term relief, the RBI will continue monitoring capital flows and global market conditions to ensure stability without excessive appreciation.

With trade optimism, foreign inflows, and strategic interventions aligning in its favour, the rupee may remain range-bound in the near term, maintaining its resilience against global volatility.