Rupee recovers as RBI intervention cools pressure from strong US dollar

The rupee clawed back some losses after the RBI intervened heavily in spot and NDF markets, helping arrest its slide toward 90 per dollar even as global dollar strength

The rupee recovered some ground against the dollar on Monday, supported by aggressive Reserve Bank of India intervention in the foreign exchange market through dollar sales. The central bank stepped in across both the non-deliverable forwards and the spot market to ease the depreciation pressure that had intensified after the currency breached the 89.50-per-dollar level on Friday, leading to a potential fall to 90 per dollar.

 

The local currency settled at 89.24 per dollar, against the previous close of 89.48 per dollar.

 

“Early this morning, the currency recovered toward 89.06, supported by what appeared to be well-timed RBI action in both the spot and NDF markets. This intervention helped halt the drift toward the psychologically sensitive 90 handle and temporarily restored some order to price action,” said Abhishek Goenka, Founder and CEO, IFA Global.

 

What factors continue to weigh on rupee sentiment?

 

“That said, underlying pressures remain intact. A firm US dollar and diminishing expectations of a swift breakthrough in the US–India trade negotiations continue to weigh on sentiment. While the RBI’s presence has helped steady the market, the broader trajectory still hinges on fresh catalysts. From a REER standpoint the rupee is undervalued, but near-term direction will be driven more by developments on the trade-deal front than by fundamentals alone,” he added.

 

On Friday, the Indian unit fell 0.9 per cent against the dollar — the second steepest fall of the year — on delays over the much-awaited trade deal and diminishing rate-cut hopes by the US Federal Reserve. The absence of the central bank in defending the currency amid panic buying of the dollar accentuated the fall.

 

How has the rupee performed relative to other Asian currencies?

 

The rupee has been the worst-performing Asian currency this year, falling 4.22 per cent against the dollar. Some currencies in the region like the Taiwan dollar, Thai baht and Malaysian ringgit have appreciated against the dollar in 2025.

 

What role is the dollar index and RBI positioning playing?

 

“The dollar index remaining above 100 levels also kept the market in a dollar-buying mode while Asian currencies were range bound. Exporters and importers need to be on the lookout for the RBI sales as it keeps increasing the short position which by end-November would have again reached $70 billion,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.