New Delhi — The Indian rupee strengthened sharply against the U.S. dollar in early trading Tuesday, gaining 77 paise as measures introduced by the Reserve Bank of India (RBI) to ease dollar demand and limit speculative currency trading continued to support the domestic currency.
The rupee opened at 95.17 against the dollar before advancing to 95.05, marking a gain of 77 paise from its previous closing level.
The latest appreciation followed a strong rally Monday, when the rupee gained 93 paise to close at 95.78 per dollar, recording its largest single-day increase in more than six months.
The currency’s recovery has been supported by recent RBI measures designed to reduce pressure on the foreign exchange market and discourage excessive speculative positions against the rupee.
Among the central bank’s initiatives is a dedicated dollar window for oil marketing companies through designated banks, intended to reduce their need to purchase U.S. dollars in the spot market.
The RBI has also increased costs associated with certain foreign exchange hedging transactions to discourage speculative activity.
Earlier this month, the central bank tightened regulations governing foreign exchange derivatives and directed banks to maintain a 20% reserve against dollar purchases exceeding $2 million.
Additional measures announced Saturday prohibit authorized dealers from allowing customers to rebook canceled foreign exchange derivative contracts involving the Indian rupee, including both deliverable and nondeliverable contracts.
Market analysts said the restrictions could help limit speculative positions and stabilize the currency by reducing immediate demand for dollars.
Despite the rupee’s recent gains, analysts expect the currency to remain under pressure from global economic conditions and foreign exchange market volatility.
Current projections suggest the rupee could trade between 95.60 and 97.50 against the dollar by the end of 2026, with most forecasts concentrated around the 96-97 range.
Meanwhile, the U.S. dollar index, which measures the greenback against a basket of six major currencies, declined 0.15% to 102.43.
The index remained near its strongest level since April 2025 as investors awaited U.S. inflation data for further indications of the Federal Reserve’s monetary policy direction.
Global oil prices also moved lower, providing additional support for the Indian currency. Brent crude futures fell more than 1% to $105.47 per barrel.
The rupee’s continued recovery reflects the immediate impact of the RBI’s intervention measures, although its longer-term direction is expected to depend on global dollar movements, oil prices and domestic demand for foreign currency. (Source: IANS)
