The Indian rupee rebounded on Thursday, pulling USD/INR away from record highs, as speculation grew that the Reserve Bank of India (RBI) had stepped in to stabilize the currency. After touching new peaks against the rupee, the US dollar weakened, allowing the pair to retreat from extreme levels.
Market participants believe the RBI intervened in the foreign exchange market, likely selling US dollars to curb excessive volatility. While the central bank has remained tight-lipped, traders noted increased dollar liquidity, suggesting an effort to prevent further rupee depreciation.
Despite the pullback, US dollar strength remains a key factor, with investors closely watching the Federal Reserve’s monetary policy stance. Persistent demand for safe-haven assets and steady US Treasury yields have kept the greenback supported, limiting the rupee’s recovery.
Meanwhile, India’s economic fundamentals continue to provide some stability. Strong foreign exchange reserves, a resilient domestic equity market, and steady capital inflows have helped the RBI manage currency pressures, even as global factors put pressure on emerging markets.
Looking ahead, traders will monitor US economic data and potential RBI actions for further clues on USD/INR’s trajectory. If the central bank remains active in the market, rupee volatility may ease, but sustained dollar strength could still challenge its ability to hold ground.
For now, USD/INR remains in focus, with the rupee’s resilience largely dependent on RBI intervention efforts and broader global market trends. Unless dollar momentum fades, the pair could see renewed upside pressure in the coming sessions.
