The rupee recovered 55 paise from its all-time low level to close at 90.38 against the US dollar after a volatile trade on Wednesday, amid suspected aggressive central bank intervention.
Illustration: Dominic Xavier/Rediff
Analysts said the rupee’s recent fall against the US dollar was primarily driven by external factors, not domestic economic weakness, and the high volatility in the forex market is expected to persist amid shifting economic and geopolitical cues.
The lack of progress in the US–India trade negotiations and extended selling by foreign portfolio investors have weighed on the sentiment, while Brent crude oil prices hovering near $60 per barrel supported the domestic unit at lower levels.
At the interbank foreign exchange, the rupee opened at 91.05 against the US dollar, then recovered some lost ground to touch an intra-day high of 89.96, registering a 97-paise gain from its previous close.
At the end of trade on Wednesday, the rupee was quoted at 90.38, up 55 paise over its last close.
On Tuesday, the rupee tanked below 91 per dollar, hitting a record low of 91.14. It finally settled at a new all-time closing low of 90.93 against the American currency.
“The Indian rupee appreciated after a five-day losing streak, bolstered by suspected aggressive intervention from the central bank,” Dilip Parmar, research analyst, HDFC Securities, said.
Parmar further added that high volatility is expected to persist in the forex market amid shifting economic and geopolitical headlines.
“Technically, USD/INR has immediate resistance at 90.60 and support at 89.70,” he said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.42 per cent higher at 98.56.
Brent crude, the global oil benchmark, was trading 2.09 per cent higher at $60.16 per barrel in futures trade.
“The rupee’s record low against the US dollar was primarily driven by external factors, not domestic economic weakness.
“Key reasons, apart from the imposition of steep US tariffs (50 per cent) on Indian exports, include persistent capital outflows and dollar demand linked to non-deliverable forward maturities.
“These factors have led to a roughly 6 per cent year-to-date depreciation, making the rupee Asia’s most negatively impacted currency in 2025,” said Deepak Agrawal, Chief Investment Officer – Debt and Product Head, Kotak Mutual Fund.
Agrawal said despite India’s strong GDP growth, robust forex reserves, and a manageable current account deficit, the lack of progress in the US–India trade negotiations and extended selling by foreign portfolio investors have weighed on the sentiment.
“The RBI remains focused on curbing volatility rather than defending a specific level, supporting a market-driven approach. Looking ahead to 2026, the rupee is expected to relatively appreciate if the India-US trade deal is finalised and capital flows improve,” Agrawal said.
On the domestic equity market front, Sensex declined 120.21 points to settle at 84,559.65, while the Nifty dropped 41.55 points to 25,818.55.
Foreign Institutional Investors turned net buyers, purchasing equities worth Rs 1,171.71 crore on Wednesday, according to exchange data.
