Rupee on Thursday opened 6 paise up to 90.32 against the US dollar in early trade, continuing its tentative recovery after hitting historic lows earlier this week.
The uptick comes a day after the currency staged a sharp rebound on Wednesday, when it snapped a five-day losing streak to recover from the losses, rising 55 paise from its record low. Back on Tuesday, the rupee had breached the psychologically significant 91-per-dollar level for the first time, touching an all-time low of 91.14 before closing at 90.93.
According to experts, the turnaround was driven by intervention from the
Reserve Bank of India (RBI), which stepped in to sell dollars following a steep and sustained slide in the currency. Rupee then climbed to an intraday high of 89.75 on the interbank order matching system, from levels close to 91.00 before the central bank’s action.
The RBI’s move reflected a strategy seen in October and November, when it intervened multiple times to counter persistent one-way depreciation in the rupee. During those periods, the central bank sold dollars heavily in both the spot and non-deliverable forward (NDF) markets, resulting in sharp intraday reversals. Unlike earlier interventions, which were carried out before market hours, Wednesday’s dollar sales began shortly after onshore trading commenced, a banker said.
“The Indian rupee appreciated after a five-day losing streak, bolstered by suspected aggressive intervention from the central bank,” said Dilip Parmar, Research Analyst, HDFC Securities.
Market experts said the rupee’s decline this year has been driven more by global pressures than domestic economic conditions. The currency has fallen almost 6% against the dollar in 2025, placing it among the worst-performing currencies globally. Analysts cited a widening trade deficit, 50% tariffs by the US and persistent investment outflows as key factors behind the weakness.
“No currency has been hit harder by US tariffs than India’s rupee,” analysts said, adding that uncertainty over a US–India trade deal has kept investors cautious, Reuters reported.
Where is Rupee headed?
State Bank of India (SBI), in its latest report, has projected a strong recovery for rupee in the latter part of the next financial year, between October 2026 and March 2027.
SBI said that its assessment is based on historical currency behaviour and internal analysis, which indicate that the ongoing weakening trend is not permanent. The report noted that the rupee has moved through different depreciation and appreciation cycles in the past and is likely to exit the current phase in the second half of the next fiscal year.
“We believe that the Rupee is likely to bounce back strongly in the second half of next fiscal”
The report traced earlier rupee movements to strong foreign portfolio investment flows, particularly before calendar year 2014. During that period, large and sustained inflows played a central role in determining the currency’s trajectory. However, SBI addded that the global environment has since changed. The report pointed out that such high levels of portfolio inflows are no longer available, with geopolitical uncertainty, including delays in trade agreements, now exerting greater influence on the rupee’s performance.
According to the bank, the period of easy and abundant capital inflows has come to an end as global risks have intensified. Data cited in the report showed that net portfolio inflows averaged $162.8 billion between CY07 and CY14. In comparison, inflows fell to $87.7 billion between CY15 and CY25 (till date).
The report further classified rupee’s long-term behaviour into three separate phases based on its interaction with the US dollar.
The first phase: The period, spanning January 2008 to May 2014, was marked by a sharp weakening of rupee compared with the dollar. During this period, the dollar rose by an average of 1.7 %, while the rupee fell by an average of 16.3%, a trend the report attributed to weak domestic fundamentals.
The second phase: om May 2014 to March 2021, movements in the rupee and the dollar were more closely aligned. Over this period, the rupee depreciated by an average of 7.9%, broadly in line with a 5.1% appreciation in the dollar, indicating a more balanced relationship between the two currencies.
The third phase: September 2024 and continues at present, has seen both rupee and dollar weaken simultaneously. According to SBI, this marks a new regime driven by elevated geopolitical uncertainty in the current global environment.
Based on this framework, the currency is still in a phase of depreciation but is expected to move out of it over time. As global uncertainties subside, the currency is projected to rebound strongly in the second half of the next financial year.