Rupee rebounds from record low as RBI curbs slide ahead of MPC meet
Rupee rebounds from record low as RBI curbs slide ahead of MPC meet
Rupee steadies above 90 per dollar as RBI action and inflows limit depreciation ahead of the MPC decision.
Mumbai watched as the rupee clawed back from an all-time low of 90.42 per dollar, closing at 89.97/$ after a day of choppy trading. State-run banks stepped in with dollar sales and corporate inflows helped push the currency off its weakest level, marking a relief rally for Asia's worst-performing currency this year. The intraday moves stretched from 90.42 to 89.86, underscoring the currency’s sensitivity to policy signals and liquidity moves.
Traders expect the rupee to trade in a wide band on Friday as markets await the Reserve Bank of India's (RBI) policy stance. A widely anticipated 25 basis-point rate cut to 5.25% could provide a temporary cushion, but analysts caution that the overall trajectory will hinge on how the central bank manages liquidity and commentary on the rupee’s recent fall. The RBI’s actions appeared aimed at preventing a breach of the 90.50 level, a threshold many market participants see as a tipping point for nervous flows.
Market watchers note that the weakness in the rupee stems from a larger current account deficit, rising import costs, and capital outflows, magnified by global factors such as tariff tensions and a strong dollar. While the central bank is seen as maintaining vigilance, the broader CAD and external demand conditions will continue to influence the currency’s path. If the MPC signals a cautious stance or reiterates a focus on liquidity management, the rupee could find a more stable footing in the near term.
For businesses, the move above 89.50 per dollar provides some relief from imported-cost pressures, but exporters may still enjoy a favorable exchange window if the currency stabilizes. The key range to watch remains roughly 89.50 to 90.50, where liquidity, policy guidance, and external developments are likely to keep the market volatile.
Overall, the day underscored the delicate balance between policy support and market forces as India braces for the MPC outcome and a potentially pivotal period for the rupee’s exchange rate.
Cover image source: Rupee Slides Below 90 For First Time; What’s Driving The Shock Fall? 🔗
