RBI intervention helps rupee to post biggest single-day gain in over six weeks

Indian Rupee

• Indian rupee posts biggest intraday gain in 6 weeks after RBI intervention
• Rupee rose 42 paise, trading at 91.6087 against US dollar in afternoon session
• Analysts predict short-term pressure but positive medium-term outlook for rupee

Did our AI summary help?

The rupee hit the biggest intraday gain in over six weeks during afternoon trade on February 2, thanks to the timely intervention by the Reserve Bank of India (RBI).

The domestic currency rebounded sharply during the afternoon session after sustained dollar selling by state-owned banks, widely seen as acting on behalf of the central bank, which helped ease volatility and stabilise market sentiment.

At 1:20 pm IST, the rupee was trading at 91.6087 against the US dollar, compared to 91.8060 at open and 91.99 at previous close against the greenback.

The rupee gained 42 paise on February 2  -- the highest level since December 19, 2025 -- when it appreciated 60 paise in a single day. In percentage terms, it is up 0.42 percent, compared to previous close.

"Today, RBI was present in the market from the beginning and ensured again that 92 is not breached," said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

“For the rupee, the budget offered reassurance, not relief. Short-term pressure may persist, but the broader message of fiscal credibility and growth continuity keeps medium-term prospects constructive,” Amit Pabari, MD, CR Forex Advisors, said.

However, Michael Wan, senior currency analyst at MUFG Bank, remained negative on the rupee and see it underperforming through 2026. He said: "We also think India's local currency rates will likely grind higher".

“The biggest takeaway from an INR FX and rates perspective is the slower-than-expected pace of fiscal consolidation (4.3 percent of GDP deficit in FY2026/27 from 4.4 percent previously), and with that larger-than-expected gross and net borrowing requirements of INR17.2 trillion and INR11.7 trillion (with INR5.5 trillion of repayment needs),” Wan said.

He added that bond markets in India were already struggling to absorb the current pace of State Development Bond issuances, with rising state government borrowing needs, given the sticky cash handout transfer programmes over the years. “As such, we think that RBI will likely have to inject more liquidity to cap bond yields or at least the pace of INR bond yield increases.”