The Indian rupee gained strength on Thursday, reaching its highest level in a month after the Reserve Bank of India (RBI) intervened in the foreign exchange market. The local currency rose to 87.70 during early trade before settling at 87.82 against the U.S. dollar, marking a 0.3 percent rise from the previous session. This recovery followed a period of sustained pressure that had pushed the rupee close to the 88.80 mark in recent weeks.
Market participants described the turnaround as caused by the RBI's aggressive intervention in the currency market. Traders estimated that the central bank sold up to 5 billion rupees using state-run banks to back the rupee. This action minimized speculative trading against the currency and enhanced investor confidence. The intervention also changed the mood in the currency options market, where offshore traders had been betting on the continued depreciation of the rupee.
Furthermore, the rupee received support from optimism about the progress in trade negotiations between India and the United States. Reports also indicated that discussions between the two countries were progressing, which eased bearish sentiments on the local currency. Traders mentioned that a breakthrough in these talks could give the rupee a short-term lift, but the effect might not last, as external factors are still uncertain.
Meanwhile, the U.S. administration announced that Indian Prime Minister Narendra Modi had agreed to halt crude oil imports from Russia. Indian officials affirmed that the country is engaging in continuous negotiations with the U.S. to enhance energy relations, which may affect foreign exchange in the future. These negotiations, in addition to stable performance in international markets, helped create a more stable trading environment.
A softer U.S. dollar also aided the rupee’s recovery. The dollar index remained steady at 98.6, while expectations of potential rate cuts by the U.S. Federal Reserve weighed on the greenback. Analysts observed that this shift encouraged buying in Asian currencies, including the rupee. Michael Wan, Senior Currency Analyst at MUFG, noted that while the RBI’s intervention had strengthened the rupee in the short term, some moderate currency weakness could still benefit India’s export competitiveness over the medium term.
Lower global crude oil prices further bolstered sentiment. Brent crude fell by 0.37 percent to $62.16 per barrel, easing concerns over India’s import costs. A decline in oil prices generally supports the rupee, as it helps narrow the country’s trade deficit. Positive movement in domestic equity markets added to the supportive environment, with key indices such as the Sensex and Nifty 50 rising more than 0.5 percent during the session.
Central bank intervention, trade optimism and a stable global market enabled the Indian rupee to be supported around the 88 level. Market participants are now awaiting another signal from the RBI and developments in international trade negotiations to determine the currency's future in the weeks ahead.