By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee rose sharply on Tuesday, aided by the central bank’s heavy-handed intervention, which also triggered stop losses for speculators betting against the currency.
The Reserve Bank of India had also intervened heavily on Monday to support the rupee, traders said.
The rupee rose to as high as 86.69 in early trading before trimming its gains to last quote at 86.89 as of 11:15 a.m. IST, up 0.7% from its previous close of 87.4750.
The Reserve Bank of India sold dollars before the open of the local spot market, via state-run banks, which persisted after the market opened, traders said.
The intervention “is surprising and has triggered a blood bath for longs (on USD/INR),” a trader at a private bank said.
The rupee’s sharp rise likely prompted traders to exit long positions on the dollar-rupee pair, adding to the currency’s tailwinds.
The RBI was also likely conducting dollar-rupee buy/sell swaps to mitigate the impact of its spot dollars sales on liquidity in the banking system, traders said.
Meanwhile, the dollar index was little changed at 108.3 while other Asian currencies declined between 0.1% to 0.7% after U.S. President Donald Trump imposed 25% tariffs on all steel and aluminium imports.
Concerns about a potential trade war, persistent foreign selling from domestic stocks and policy easing by the RBI have all weighed on the rupee this year, driving it lower by over 1% in 2025 so far.
“We note that the accentuated moves in USDINR witnessed lately has brought the currency to near fair value. However, given the unrelenting global uncertainties in the near term we expect the pressure on INR to continue,” Kotak Mahindra Bank said in a note.
(Reporting by Jaspreet Kalra; Editing by Varun H K)
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