Rupee rebounds over 1% as RBI intervenes, traders cut dollar positions

The rupee staged a significant recovery against the US dollar on Wednesday, strengthening by more than 1% during the session after four consecutive days of record lows. The Reserve Bank of India intervened in the foreign exchange market to address volatility, with state-run banks selling dollars on its behalf. According to dealers, RBI was selling dollars, but the recovery is only partly due to intervention. The market was also veering away from the 91-per-dollar level, with traders cutting long dollar positions.

The rupee, which had opened slightly weaker at 91.07 per dollar compared to the previous close of 91.03, reversed course and traded as strong as 90.25 during the day, as the cooling of crude prices also contributed to improved sentiment.

Market participants indicated that the sharp depreciation in the rupee over recent sessions was driven by ongoing foreign portfolio outflows and unresolved India–US trade negotiations. As the currency approached resistance near 91 per dollar and dollar demand waned, stabilisation followed.