Rupee posts biggest single-day gain in three weeks on debt inflows

The rupee rose 0.46 per cent against the US dollar on Tuesday, supported by sustained debt inflows, easing demand from oil companies and a weaker greenback

The rupee on Tuesday recorded its biggest single-day gain in three weeks as foreign inflows continued into debt, with muted dollar demand from oil firms providing support, dealers said. 

The domestic currency closed at 94.97 against the US dollar, appreciating 0.46 per cent from the previous close of 95.40. This was the rupee's biggest gain since June 12, 2026, when it appreciated 0.68 per cent. The Indian unit was the best-performing Asian currency after the South Korean won, which gained 0.91 per cent. 

The rupee’s recovery comes after sustained pressure in recent weeks despite measures announced by the Reserve Bank of India (RBI) to attract dollar inflows. “There were some NDF maturities also that took dollar up in the last few days. Today oil bidding ended and allowed rupee to gain up to 94.95 levels after about a week of downside,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors. 

 

The RBI’s outstanding net short dollar position in the forward market increased to a record $106.66 billion at the end of May from $95.30 billion at the end of April. Of the $106.66 billion net short dollar position, $19.82 billion was in one-month contracts, $8.86 billion in one- to three-month tenures, $21.90 billion is set to mature between three months and one year, and the rest $56.07 billion was in contracts of over one year. 

The Indian currency, which came under pressure after the West Asia conflict started in late February, has depreciated 4.2 per cent since then. It has declined 9.59 per cent against the dollar over the past year. 

Following regulatory measures announced in late March, the rupee has been relatively stable in this financial year, slipping 0.16 per cent. “The rupee opened stronger as the dollar weakened following softer PMI data. As the session progressed, debt-related inflows lent further support to the currency, while stop-losses on long dollar positions accelerated the gains,” said a dealer at a private bank. “The inflows appeared to be largely into debt, which, along with the unwinding of long dollar positions, helped the rupee strengthen through the day," the person added. 

Asian currencies strengthened on Tuesday as expectations of aggressive US Federal Reserve tightening eased following softer-than-expected US labour market data.