The rupee closed at 90.38 per U.S. dollar, up 0.7% from its close of 91.0275 in the previous session.
The currency had dropped to its all-time low of 91.0750 in the previous session. It jumped sharply a little after the spot market opened on Wednesday as the RBI stepped in to shore it up, traders said.
The intervention echoed the central bank’s actions in October and November, when it intervened aggressively to disrupt persistent one-way moves in the rupee. The currency had declined nearly 2% over December before the RBI’s intervention.
The central bank’s move on Wednesday signalled “its discomfort with rapid depreciation (of the rupee) beyond recent ranges,” said Abhishek Goenka, chief executive at FX advisory firm IFA Global.
“While the broader bias for USD/INR remains influenced by trade deal and capital flow dynamics, today’s action reinforces the RBI’s role as a stabiliser rather than a defender of fixed levels,” he said.
The rupee is Asia’s worst performing currency this year, pummelled by a stalemate in U.S.-India trade talks, record portfolio outflows, and sustained corporate caution around further weakening of the currency.Clearing house data showed importer activity remained elevated in November while exporters held back, as the rupee remained under pressure. This skew has been a strain on the rupee over recent months.
The currency’s slide has pushed it into “undervaluation” territory but investors remain wary of lapping up Indian stocks and bonds as a missing trade agreement with the U.S. leaves it exposed to further weakness.
Meanwhile, a broadly stronger dollar hurt most Asian currencies on Wednesday. The dollar index rose nearly 0.4% to 98.6.
