The Indian rupee ended higher for second consecutive session on Wednesday on likely dollar sales from state-run banks, which traders said could be on behalf of the central bank, helping reverse the pressure from slightly softer Asian cues.
The rupee ended 0.3% higher at 89.88, its highest closing level in a week, after closing at 90.1650 in the previous session. It hit an intraday high of 89.86.
The Reserve Bank of India resorted to heavy intervention to support the rupee once again, nine traders said, and that pushed the currency past the 90-per-dollar mark.
Wednesday’s intervention followed a familiar playbook that the RBI used repeatedly last year, when it stepped in aggressively to push the rupee higher, aiming to disrupt one-way moves. Previous interventions came amid a build-up of speculative long dollar positions and expectations of consistent rupee depreciation, according to bankers.
Before the central bank intervention on Wednesday, the rupee had fallen about 1% over the past two weeks.
Headwinds for rupee
The local currency rupee continues to face headwinds from persistent foreign selling of Indian equities, a trend that has extended from 2025 into the New Year, alongside lingering uncertainty over a U.S.–India trade deal.
“Going forward, resilient macro fundamentals and an improvement in capital flows as U.S. related trade uncertainty eases, should reduce pressure on the rupee. However, we expect the currency to remain range-bound, as the RBI rebuilds FX reserves if portfolio inflows recover,” Goldman Sachs said in a note.
It forecasts the currency to be at around 89.50 in three months and 91 in six months.
