The rupee opened at ₹95.17 on Tuesday, a 60‑paise lift from Monday’s close of ₹95.77, after the Reserve Bank of India sold dollars in the market.
RBI’s intervention followed a broad tightening of foreign‑exchange rules: the cash deposit requirement for hedging now covers all FX transactions, not just those by banks for their own books. The central bank also narrowed the scope of non‑deliverable rupee derivatives to pure hedging, cutting space for speculative plays.
By flooding the market with dollars, RBI increased the supply of the foreign currency, easing dollar demand. The new derivative restrictions further blunt the ability of traders to build positions that would otherwise sell rupee reserves.
Yet the rupee’s lift is still vulnerable to global forces. Crude oil prices, which drive India’s import bill, and the dollar’s weekly drift are likely to dictate the currency’s trajectory. Strong foreign‑investment inflows could buoy the rupee, while sustained outflows would undermine it.
“While the rupee recovered by about 1% on Monday following the RBI’s measures, this positive development shouldn’t be viewed as a turning point just yet,” said Pavan Kumar Kavad, MD of Prithvi Exchange. A senior treasury official at a bank echoed the caution, noting that RBI’s actions may only tweak short‑term dynamics if the underlying pressures persist.
Going forward, traders will watch for any further RBI interventions and for indications of how global oil and dollar movements evolve. The rupee’s near‑term resilience hinges on the central bank’s willingness to keep intervening and on external conditions that dictate capital flows.