The rupee, after remaining volatile in the previous trading session, recovered to reclaim the 87 mark against the US dollar on February 11. This is the strongest rally that the rupee has seen in over two years, on possible intervention by the central bank.
The rupee opened at 87.35 against the US dollar and then recovered to 87.0750 against the US Dollar, as compared to 87.48 at the previous close against the greenback. The rupee closed 0.7% higher at 86.8275 against the US dollar, logging its biggest one-day gain since March 2023.
The local currency, on February 10, touched a new record low at 87.9563 against the US dollar due to the introduction of new tariff plans by US President Donald Trump.
The heavy intervention by the Reserve Bank of India (RBI) has helped the local currency to end on a flat note on Monday.
Bloomberg News quoted Anindya Banerjee, currency strategist at Kotak Securities, saying, "The RBI has been heavily intervening since yesterday morning to support the rupee."
"RBI will continue to support the rupee to hammer out any one-way, linear expectations," Kotak Securities strategist added.
Going ahead, after the start of the trade tariff by the US, it will be important to watch Prime Minister Narendra Modi’s US visit.
PM Modi will visit the US for two days on February 12 and 13.
The Prime Minister said that his US visit will be an opportunity to build upon the successes of his collaboration with Trump in his first term and develop an agenda to further elevate and deepen bilateral ties across areas like technology, trade, defence, energy, and supply chain resilience.
MUFG in its report dated February 11 said that India has tried to proactively cut down some duties and also accept unauthorised immigrants so far, in the hopes of also keeping its core interests of legal migration channels (eg. H1-B visas) and also benefiting from a manufacturing hub from the US trade war with China.
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