Rupee firms to 95.15 for third straight session as RBI steps curb dollar demand

what happened

The Indian rupee strengthened for a third consecutive session and briefly reached its highest level in over a month before giving back part of the gain, Moneycontrol reported. Currency traders credited the move to Reserve Bank of India measures and a reduction in bets on dollar strength.

On Wednesday the rupee finished at 95.17, up 19 paise. Over the last four trading sessions it appreciated by 171 paise against the dollar, becoming the best-performing currency in Asia. Among the central bank's steps are a dedicated dollar window aimed at three state-run oil marketing firms, tighter caps on FX derivative positions lacking underlying exposure, and a Foreign Exchange Risk Reserve (FERR) requirement for certain rupee-linked derivatives.

In an exclusive interview with Moneycontrol, Governor Sanjay Malhotra said the bank is ready to act further if needed and stressed that it does not aim for a specific exchange rate or band. Analysts note that importer demand is limiting the rupee's gains. Jateen Trivedi of LKP Securities warns that a sharp jump in oil prices could revive pressure on the currency, with Brent trading near $105.93 a barrel and sustained levels above $100 weighing on the current account.

why it matters

For markets, the episode shows that intervention and restrictions can quickly support a currency, but the durability of the rebound depends on dollar demand, oil prices and capital flows. According to Bloomberg data, the rupee's year-to-date decline has narrowed to about 5.4% after falling more than 7% between January and last Friday, while the Indonesian rupiah, down 6.8% this year, has become Asia's worst-performing currency.

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