Overview
- The currency surged as much as about 0.9% intraday to roughly 87.99 per dollar on Wednesday and later settled stronger near 88.07, reversing Tuesday’s all-time closing low around 88.81.
- Traders reported heavy RBI dollar selling in onshore and offshore markets, with state-run banks offering dollars and earlier short-dollar positions in NDFs estimated around $15 billion.
- A person familiar with the central bank’s thinking said the RBI aims to prevent a break of the record low near 88.80 and will keep acting until speculative rupee shorts are cleared, backed by roughly $700 billion in reserves.
- A softer U.S. dollar following Fed signals of further rate cuts helped lift Asian currencies, while optimism around India–U.S. trade talks added support despite ongoing tariff tensions.
- Cooling domestic inflation below 2% has opened policy space that is influencing bond yields, even as the central bank manages currency stability through swaps and targeted market operations.