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India’s rupee rallied by the most in over two years on suspected strong intervention by the central bank, catching traders offguard after the currency hit a series of record lows in recent weeks.
The rupee gained nearly 1%, the most since November 2022, to 86.6362 per dollar in Asia’s best performance on Tuesday.
The surprise rally “will take out speculative positioning,” said Ashhish Vaidya, head of treasury at DBS Bank Ltd. in Mumbai. “It’s a very smart move by the RBI.”
The rupee has weakened significantly since the new Reserve Bank of India Governor Sanjay Malhotra took office in December, encouraging speculation that he’s more open to letting the currency float more freely. Malhotra in his first comments on forex strategy last week said the central bank’s policy remains consistent in its aim to maintain stability without hurting market efficiency.
Tuesday’s gain “smoothens things out a little bit” after the steady depreciation in recent weeks, said Vaidya.
An email and a phone call to the RBI’s spokesperson weren’t immediately answered.
The rupee hit a fresh low Monday after the central bank cut interest rates last week. A stronger dollar, spurred by US President Donald Trump’s tariffs have also weighed on emerging-market currencies, including the rupee.
“The RBI may have sold $7 billion yesterday, and has again possibly intervened today to the tune of $4 billion,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors. “This is taken from estimates provided by interbank brokers.”
–With assistance from Bhaskar Dutta and Malavika Kaur Makol.
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