The Indian rupee extended its recovery for the second consecutive day, opening stronger at 89.65 against the US dollar, amid expectations of Reserve Bank of India (RBI) intervention in the foreign exchange market.
On December 19, the domestic currency staged a sharp rebound, climbing past the key psychological 90-per-dollar mark and settling at its highest level in more than two weeks. The move marked a notable turnaround after the rupee had recently slipped to record lows.
RBI Intervention, Dollar Softness Aid Rupee
Forex market participants attributed the rupeeтАЩs recent strength to suspected RBI dollar sales, aimed at curbing excessive volatility and stabilising the currency. A softer US dollar index and easing global bond yields also provided support to emerging market currencies, including the rupee.
Traders said sustained intervention by the central bank helped improve near-term sentiment, encouraging short covering in the dollar-rupee pair.
Outlook Remains Cautious
Despite the rebound, analysts remain cautious on the rupeeтАЩs medium-term trajectory, citing foreign fund outflows, trade-related uncertainties, and global interest rate dynamics as key risk factors. However, RBIтАЩs active presence is expected to limit sharp downside moves in the near term.
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