Rupee Rebounds as RBI Intervention and Equity Inflows Ease Bearish Sentiment

Image Source: CNBC TV18

The Indian rupee is showing signs of resilience after months of pressure, with investors turning less bearish amid decisive central bank action and renewed foreign interest in domestic equities. The currency, which had recently touched record lows, has rebounded sharply, prompting analysts to revise their outlooks.

Key Highlights:

The rupee surged past 84 per US dollar for the first time since October 2024, reaching a peak of 83.83, supported by dollar sales from foreign banks and strength in regional currencies.
RBI’s outsized intervention, estimated at $10–11 billion over two days, helped the rupee recover from an all-time low of 87.95 to 86.47, curbing speculative short positions.
Foreign institutional investors have bought Indian equities for 11 consecutive sessions, the longest streak in two years, boosting dollar inflows and sentiment.

Market Dynamics:

The rupee’s rally coincides with optimism around a potential US-India trade deal and expectations of a softer dollar under the Trump administration’s second term.
Risk reversals and hedging costs have declined, indicating reduced demand for bearish rupee options and improved investor confidence.
Analysts now forecast the rupee to end 2025 closer to 84, up from earlier estimates of 86–87, citing improved macro fundamentals and RBI’s proactive stance.

Outlook: While global uncertainties persist, the rupee’s recent strength suggests a shift in sentiment. Continued equity inflows, stable oil prices, and calibrated RBI interventions could support the currency’s stability in the near term.

Sources: Economic Times, Moneycontrol, Business Standard, AInvest, CFO News.