MUMBAI: The Indian rupee closed stronger on Tuesday, hoisted by likely market intervention by the Reserve Bank of India even as routine dollar bids from importers and foreign banks kept a lid on the currency’s gains.
The rupee closed at 88.6550 against the U.S. dollar, up 0.1% on the day, after being pinned close to its all-time low over recent trading sessions.
The currency touched a peak of 88.42 in early trading before trimming gains.
The RBI likely intervened to shore up the rupee before the local spot market opened and was possibly active intermittently though the day’s session as well, traders said.
Early in the session, broad based interbank offers in wake of the intervention also helped the rupee, but importers stepped in around the 88.50 mark, a trader at a Mumbai based bank said.
A pickup in dollar strength has exerted strain on the rupee since last week, adding to the headwinds sparked by worries over the hit from steep U.S. trade tariffs and muted foreign portfolio flows. The currency has declined 3% over 2025 so far.
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On the day, the dollar index was perched near a three-month peak while most Asian currencies slipped. India’s benchmark equity indexes, meanwhile, declined about 0.6% each.
Foreign investors were net buyers of Indian equities worth $1.6 billion last month but the year-to-date tally stands at a net outflow of nearly $17 billion.
“We continue to forecast INR underperforming core G10 and Asia FX, but the key change relative to last month is the RBI drawing a line in the sand for now at the 88.800-level for USD/INR,” analysts at MUFG said in a note.
The firm expects the rupee to recover modestly to 88.50 in the second quarter of 2026. India’s financial markets will be shut on Wednesday for a local holiday.
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