The Indian rupee strengthened by 0.4% to 90.54 per US dollar, supported by heavy intervention from the Reserve Bank of India (RBI). Traders reported significant dollar selling by the central bank to stabilize the currency amid global trade pressures, capital outflows, and speculation-driven volatility.
Intervention Supports Rupee
The Indian rupee gained ground on Tuesday, closing 0.4% higher at 90.54 per US dollar, after the Reserve Bank of India (RBI) reportedly sold large volumes of dollars in the market. Traders indicated that the central bank’s aggressive intervention was aimed at curbing volatility and shoring up investor confidence.
The rupee has faced sustained pressure in recent weeks, crossing the 90-per-dollar mark due to factors such as trade deficits, US tariffs, and capital outflows. Analysts note that the RBI’s strategy involves unpredictable, sophisticated interventions, including confidential directives to dealers, to prevent speculation while preserving reserves.
The intervention coincides with the RBI’s recent 25 basis point rate cut, a move that surprised markets given the currency’s weakness. Economists suggest the central bank is balancing growth support with currency stability, leveraging India’s strong forex reserves to defend the rupee.
Key Highlights
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Rupee Performance: Up 0.4% at 90.54 per US dollar.
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RBI Action: Heavy dollar selling reported to stabilize the currency.
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Market Context: Pressure from trade deficits, US tariffs, and capital outflows.
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Policy Balance: Intervention follows RBI’s surprise 25 bps rate cut.
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Strategic Aim: Prevent speculation, maintain stability, and support growth.
Sources: Times of India, Finnovate, RBI Official Website