The Indian rupee opened stronger against the US dollar on Thursday, rebounding from recent lows amid suspected Reserve Bank of India intervention and hopes for progress in US-India trade talks. Traders noted the currency gaining ground in early deals at the interbank foreign exchange market, shaking off pressures from a widening trade deficit and persistent foreign portfolio outflows.
After snapping a five-day losing streak on Wednesday with a sharp 55-paise recovery to close at 90.38, the rupee continued its bounce. It touched intraday highs around 89.96 during Wednesday’s session, fueled by heavy dollar sales from the central bank. Thursday’s early trade saw it hold steady near 90.32-90.35, reflecting cautious optimism despite a firm dollar index hovering above 98.50.
Bankers attributed the uptick to RBI’s aggressive spot and forward market moves, mirroring tactics from October and November that reversed steep slides. The central bank’s focus remains on curbing volatility rather than pinning a specific level, supporting a market-driven path while keeping depreciation in check.
RBI Steps In Heavy to Cap Currency Slide:
After the rupee fell close to 91.00 on Wednesday morning, the Reserve Bank of India moved quickly to sell dollars. The pair quickly reversed as a result, reaching 89.75 on the order matching system before settling at 90.38 provisional. Similar to previous incidents where spot and NDF sales reversed intraday trends, the intervention disrupted one-way negative bets.
After five straight losses, analysts like Dilip Parmar of HDFC Securities described it as a classic RBI play to calm anxieties. Although there is still a lot of volatility, the bank has more than $700 billion in foreign exchange reserves. As domestic shares fought back, FIIs switched net buyers, increasing fuel.Global indicators were mixed, with the dollar index rising 0.42% to 98.56 and Brent crude rising 2.09% to $60.16 due to supply concerns. However, the rupee ignored the strength of the US dollar, relying on local support and rumors of a trade deal that might eventually reduce the pair by 3-6%.
Trade Deficit, FPI Selling Weigh on Rupee:
A widening trade gap and FPI decline, which were made worse by stalled US negotiations following tariff hikes in April, put pressure on India’s currency. Since then, the rupee has lost 5.7% more than its rivals; in December, it broke 91 on deficit concerns. The shock was lessened by reserves, a robust GDP, and a positive CAD, but without any movement on a deal, sentiment worsened.I
By limiting discomfort, RBI’s measured interventions prevented disorderly falls. The strategy-sell early, sell hard was proven by Wednesday’s rebound from all-time lows close to 91.05. Building on that trend, Thursday began at 90.35, moved up to 90.32, and then leveled out at 90.38.While importers hurried purchases on dips and exporters kept dollars in expectations of better rates, central bank control maintained. The spike in Brent increased the strain on import bills, but the rupee remained stable, looking to appreciate in 2026 if talks improve.
Analysts Eye Rebound If Trade Deal Lands:
Thursday’s surge is viewed by market observers as breathing room rather than a reversal of the trend. Anuj Agrawal pointed out that the RBI’s volatility control over level defense has potential benefits if trade agreements improve capital flows. According to projections, the rupee may eventually return to the mid 80s.In the near future, attention will continue to be on domestic indicators like FPI flows as well as US inflation readings and Fed signals. Large gains are limited by the resilience of the dollar index, but the RBI’s watchfulness buys time. In the face of global change, the rupee’s future depends on external balances and policy anchors.The rupee recovered from record lows on Thursday thanks to central bank strength, completing a difficult week. In order to maintain the pair fluctuating near 90 before year-end, traders wager on additional support if pressures increase.
