Rupee gains for third straight session, closes at 95.16 on RBI support

The rupee closed at 95.16 per dollar, up 0.13 per cent, as RBI forex measures and Governor Sanjay Malhotra's comments lent support, while importer demand capped its gains

The rupee rose for the third consecutive session on Wednesday to close at a more than one-month high, as the Reserve Bank of India's (RBI's) recent forex measures and Governor Sanjay Malhotra's comments reinforced expectations of further support for the currency, dealers said.

 

The rupee rose to an intraday high of 94.75 per dollar before settling at 95.16 per dollar, up 0.13 per cent from its previous close of 95.28 per dollar. The local currency gave up some early gains as demand for dollars from importers seeking to hedge against further depreciation and continued portfolio outflows limited its gains.

 

“The recovery suggests some selling pressure on the dollar at higher levels, potentially reflecting profit-booking in long-dollar positions and selling by exporters. However, the sustainability of the rupee's recovery will depend on dollar demand from importers, movements in the US Dollar Index and elevated Brent crude prices,” said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

 

 

Sanjay Malhotra, governor, RBI, defended the central bank's recent forex restrictions, saying they were aimed at discouraging speculative positions and that the RBI was ready to take additional steps to ensure orderly movement of the rupee. He also said that while monetary policy was not typically used to address financial stability concerns, the two could not be entirely separated.

 

Market participants interpreted the comments as a signal that the central bank had limited tolerance for further weakness in the rupee.

 

The currency had declined more than 7 per cent so far in 2026 before the RBI announced fresh measures over the weekend. It has recovered around 1.7 per cent this week.  

 

Rupee swap markets are currently pricing in nearly 100 basis points of rate increases over the next 12 months.

 

Meanwhile, Indian importers continued to lock in future dollar purchase rates to protect themselves against further rupee depreciation, despite higher hedging costs following the RBI's measures. The one-month forward premium rose to 7.18 per cent from 5.66 per cent in the previous session.

 

In the bond market, the yield on the benchmark 10-year government bond settled at 7.40 per cent, against the previous close of 7.37 per cent, tracking the rise in crude oil prices.

 

Brent crude was trading near $106 per barrel, remaining elevated after renewed fighting between Saudi Arabia and Yemen's Houthis raised fresh concerns over supply disruptions in the Middle East. Worries over the security of shipping through the Strait of Hormuz also kept prices firm. Sustained crude prices above $100 remain a risk for India's inflation outlook, the current account deficit and the rupee. Foreign portfolio investors have pulled out about $4.9 billion from Indian markets so far in October.

 

Market participants are also tracking the dollar's movement ahead of US consumer inflation data due later on Wednesday for cues on the future trajectory of interest rates in the world's largest economy. The dollar index was last at 102.2.

 

"The Indian rupee continued its upward trajectory, bolstered by central bank market intervention and the unwinding of long dollar positions. Nevertheless, strong importer demand capped gains over the course of the trading session. Market participants are treading cautiously ahead of crucial US inflation figures scheduled for release today. In the short term, spot USD/INR is expected to trade within a range, with key support at 94.70 and resistance near 95.50," said Dilip Parmar, senior research analyst, HDFC Securities.