Key Highlights
- Second day up: The rupee touched 95.05 per dollar in early trade on Tuesday.
- Monday’s jump: It gained 93 paise on Monday, its biggest one-day rise in over six months, to close at 95.78.
- Two-day recovery: From Friday’s 96.71, the rupee is about ₹1.66 stronger.
- Why: RBI’s dollar window for oil companies and costlier speculative hedging.
- Outlook: Experts expect 96–97 per dollar by end-2026.
The rupee strengthened for a second straight day on Tuesday, opening at 95.17 against the US dollar and touching 95.05 in early trade, supported by the Reserve Bank of India’s measures to reduce dollar demand and curb speculation.
On Monday, the rupee gained 93 paise to close at 95.78, its steepest single-day rise in more than six months.
How Far It Has Come
| Day | Rupee per dollar |
|---|---|
| Friday close | 96.71 |
| Monday close | 95.78 |
| Tuesday (early high) | 95.05 |
That is a recovery of roughly ₹1.66, or about 1.7%, in two sessions, after the currency had neared a record low of about 97.
What’s Driving It
The RBI’s steps are working on two fronts:
- Less dollar demand: A dedicated dollar window for oil marketing companies through designated banks keeps their large dollar purchases out of the spot market.
- Costlier speculation: Higher costs for certain hedging transactions, including a 20% reserve on dollar purchases above $2 million, and a ban on rebooking cancelled rupee derivative contracts.
Global factors helped too. The dollar index slipped 0.15% to 102.43, and Brent crude fell over 1% to $105.47 a barrel.
Why It Matters: A Relief Rally, Not a Turnaround
The sharp gains show how much RBI intervention can move the market in the short term. But experts expect the rupee to trade between 95.60 and 97.50 by the end of 2026, with most forecasts around 96–97. In other words, they see today’s levels as temporary relief rather than a lasting reversal.
The reason is that the underlying pressures haven’t gone away. Oil is still above $100, the dollar remains near its strongest level since April 2025, and foreign investors have been selling Indian assets. Until those ease, the RBI may need to keep defending the currency.
What to Watch
- US inflation data and Federal Reserve signals
- Crude oil prices
- Whether the RBI continues to defend the 97 level
The Bottom Line
The rupee has bounced back sharply on the RBI’s firepower. Whether it holds will depend on oil, the dollar and foreign flows, not just the central bank.
With inputs from IANS.