The rupee has recovered from a record close of 96.88 to about 95 a dollar. The RBI announced support measures on October 10. The central bank is defending the currency more actively.
Rupee Recovers From Record Low
The rupee closed at a record low of 96.88 against the US dollar on Thursday, October 8, HDFC Sky reported. It ended Friday at 96.71, up 17 paise. Other reports put Friday’s close at 96.73.
The Reserve Bank of India (RBI) announced its measures on Saturday, October 10. The rupee had been approaching 97 per dollar, with elevated crude oil prices, foreign capital outflows and strong dollar demand weighing on it. It had lost about 6.6 per cent of its value so far in 2026, Analytics Insight reported.
On Monday, October 12, the rupee opened at 95.76 against the dollar. It gained 91 paise in early trade and closed at 95.78, a rise of 93 paise. That was its strongest one-day gain since April, according to Kotak Neo.
What the RBI Announced
The RBI set up a dedicated dollar window for oil marketing companies through designated banks. The facility took effect on October 12. It lets the companies meet their daily dollar needs through those banks instead of buying in the open market.
The RBI also raised the cost of certain foreign exchange hedging transactions. It tightened rules in the foreign exchange derivatives market to curb speculative bets against the rupee. The central bank said the measures aim to strengthen market discipline and keep the market orderly and transparent.
Bloomberg called them the strongest steps to support the currency since the 2013 taper tantrum. Kotak Neo said the RBI also intervened through state-run banks.
Gains Extend for a Second Day
The rupee opened at 95.16 on Tuesday, October 13, up 62 paise from Monday’s close of 95.78, Kotak Neo reported. That extended the recovery for a second straight session.
Business Standard’s market blog on Wednesday carried a headline noting the rupee’s strength around the 95 per dollar mark. A market ticker on Thursday morning showed the dollar at ₹95.09, according to Goodreturns.
On Monday, one-month non-deliverable forwards moved as much as 2.7 per cent stronger to 94.17 per dollar. They pared the gain later, IBTimes India reported.
Bond Yields Rise
Government bonds fell on Monday. The benchmark 10-year yield rose as much as 7 basis points to 7.37 per cent, Bloomberg reported. That was the highest level since October 2023.
Analysts See a Change in Approach
Anindya Banerjee heads research for currency, commodities and interest rates at Kotak Neo. He said the RBI has moved from smoothing volatility to a more active defence. He said the market respected that shift on the first day.
Galvin Chia, an emerging Asia strategist at Societe Generale, said the RBI had been behind the curve. He pointed to the number of measures needed this year. Analysts quoted by IBTimes India expected the RBI to defend the 97 level.
Pressure Points Remain
Whalesbook said investors should watch whether the measures can offset heavy foreign selling. Foreign institutional investors have sold more than ₹44,000 crore of Indian shares this month. PTI put outflows at ₹44,166 crore in the first part of October.
Crude oil stays high. Brent crude futures traded at $106.58 a barrel on Wednesday morning, Reuters reported, as Houthi attacks on Saudi Arabia met more Russian diesel supply.
US data added to the challenge. US consumer prices rose 3.7 per cent in September from a year earlier. The Bureau of Labor Statistics said that was above expectations of 3.6 per cent. Higher US inflation raises the chance of a firm dollar and higher US yields. PTI had linked the October foreign selling to a firmer dollar and higher US bond yields.
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Stocks Rally on Rupee Relief
Easing pressure on the rupee helped Indian shares. The Sensex gained 1,109.10 points on Tuesday and the Nifty 50 rose 1.6 per cent, Business Standard reported. Reuters said support from the RBI for the rupee boosted sentiment.
What Comes Next
Kotak Neo said crude oil, US yields and inflation data will determine whether the rupee’s gains hold. The next US inflation reading is due on November 10.
