Talk that policymakers might even raise interest rates buttressed the rupee, which outshone peers in the continent to emerge as the strongest Asian performer against the dollar Thursday.
The local unit closed at 96.20 per dollar in the Mumbai spot market against the previous close of 96.82. Traders reported heavy dollar sales by state-run banks, likely on behalf of the Reserve Bank of India (RBI), a day after forward market rates for the rupee had breached the psychologically important 100 per USD mark.
“The RBI must have sold $4-5 billion today (Thursday), so there was heavy dollar selling after a long time. The stronger levels offered importers a good opportunity to buy, but I suspect importers hedged only their short-term liabilities,” said Anil Bhansali, head of treasury, Finrex Treasury Advisors. “Many are waiting for better levels on expectations the RBI would come up with some measures to protect the rupee.”
To the Rescue Heavy dollar sales by state-run banks and expectations of a rate hike helped rupee rebound, but elevated oil prices and FPI outflows continue to weigh
Intervention was seen even before domestic markets started trading, with the rupee strengthening from around 96.75 a dollar at 8.45 am to open at 96.30. Traders said interventions continued through the day, as the currency moved in a 95.99 – 96.50 range, while stronger rupee levels prompted importers to step in and buy dollars.
“After touching almost 97, the currency recovered today (Thursday). Plus, there were reports that there is a possibility of rate action, which aided the rupee,” said VRC Reddy, head of treasury, Karur Vysya Bank. “But underlying sentiments like higher oil prices and FPI outflows continue, and until those persist, there will be weakness.”
India is considering all available options, including an interest rate increase, to help stabilise the currency, Bloomberg News reported Thursday. Reddy said he also expects the depreciation pressure to moderate going forward, as “one positive news item will pave the way for a sharp appreciation in the currency.”
DBS Bank, meanwhile, expects the rupee to be in the 95-100 range for the rest of 2026, the institution said in a note Thursday.
Brent crude futures gained $1.39 to $106.4 a barrel on Thursday, according to Reuters. The rupee has depreciated more than 3% in FY27 so far, and had lost nearly 11% in FY26 against the dollar.
