Indian Currency are placed in different compositions
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SANJAY SHARMA
The Indian rupee is set to extend its rally on Thursday, buoyed by US President Donald Trump’s comment that India plans to halt Russian oil imports and by the domestic central bank’s forceful defence of the currency in the previous session.
The one-month non-deliverable forward indicated the rupee will open in the 87.60–87.70 range to the US dollar, after rallying 0.8 per cent on Wednesday to settle at 88.0750, its best day in nearly four months.
Trump said Indian Prime Minister Narendra Modi assured him that India would halt imports of Russian crude. India’s purchases of discounted Russian oil have been a point of friction with Washington and was behind punitive tariffs imposed on Indian goods.
“Trump’s remarks raise expectations of a potential trade deal between India and the US, and when you add what happened yesterday, the rupee looks set to rally further,” said a portfolio manager at a Singapore-based hedge fund.
On Wednesday, the RBI’s heavy dollar sales through state-run banks caught the market off guard, triggering stop-losses on long dollar positions and prompting a sizeable squeeze.
The move, which yanked the rupee off near its all-time lows, was widely read as a signal of the RBI’s discomfort with the constant pressure that the rupee has been under.
Bankers reckoned the RBI’s move reflected a broader effort to reset market dynamics, after speculative dollar longs had built up and sentiment had turned one-way against the rupee, prompting a February-style clean-up operation.
“The RBI has completely flipped the script; what was a one-way short-rupee market is now looking two-way,” said a spot trader at a private bank.
“Positioning is no longer skewed toward dollar longs — traders will likely sell dollar/rupee into any upticks.”
After Wednesday’s intervention, RBI head Sanjay Malhotra reiterated at an IMF-World Bank event that the central bank does not target a particular rupee level.
Meanwhile, the softness in the dollar index, coupled with strength in other Asian currencies, would provide traders further incentive to sell the dollar against the rupee.
Published on October 16, 2025
