Rupee advances after 10 days due to RBI intervention

MUMBAI: The Indian rupee rose to a 10-day high against the dollar in the spot market on Thursday, to register its biggest gain in a fortnight, following what was described as an unusually heavy intervention by the central bank to support the currency.

Talks that policymakers could also raise interest rates would weigh on the rupee, which emerged as Asia’s strongest performer against the dollar on Thursday, outperforming its continental peers.

The local unit closed at 96.20 per dollar against the previous close of 96.82 in the Mumbai spot market. Traders reported heavy dollar selling by state-run banks, a day after the rupee’s forward market rate breached the psychologically important 100 per USD mark, possibly on behalf of the Reserve Bank of India (RBI).

“RBI should have sold $4-5 billion today (Thursday), so there was a heavy sell-off in the dollar after a long time. The strong level gave importers a good opportunity to buy, but I suspect importers were hedging their short-term liabilities,” said Anil Bhansali, Treasury Head, Finrex Treasury Advisors. “Many are waiting for a better level on expectations that the RBI will come up with some measures to protect the rupee.”

The intervention was seen even before domestic markets resumed trading, with the rupee strengthening around 96.75 to the dollar to open at 96.30 at 8.45 am. Interventions continued throughout the day, traders said, as the currency moved to a range of 95.99 – 96.50, while a stronger rupee prompted importers to buy dollars and buy dollars.

“After touching around 97, the currency recovered today (Thursday). Also, there were reports that rate action is likely, which helped the rupee,” said VRC Reddy, Treasury Head, Karur Vysya Bank. “But underlying sentiment like higher oil prices and FPI outflows persist and will remain weak as long as it continues.”

India is considering all available options, including interest rate hikes, to help stabilize the currency, Bloomberg News reported on Thursday.

Reddy said he also expects depreciation pressures to remain modest going forward, as “a positive news will pave the way for a sharp appreciation in the currency.”

DBS Bank, meanwhile, expects the rupee to remain in the range of 95-100 for the remainder of 2026, the institution said in a note on Thursday.

Brent crude futures rose $1.39 to $106.4 a barrel on Thursday, according to Reuters. The rupee has depreciated over 3% so far in FY27 and depreciated nearly 11% against the dollar in FY26.