The Indian rupee found strong footing this week after decisive intervention by the Reserve Bank of India to curb speculative pressure, marking its sharpest single-day rise in more than a decade and lifting sentiment across domestic markets.
On April 2, the currency surged 1.82 per cent to close at 93.10 against the US dollar, rebounding from record lows hit just days earlier, after the RBI tightened rules on non-deliverable forward (NDF) trading and restricted banks from offering or re-booking certain derivative contracts. The move appears to have squeezed aggressive short positions that had weighed heavily on the spot market, helping the rupee outperform all major Asian peers and prompting a late recovery in equities.
With currency stability back in focus, attention is now turning to the RBI's Monetary Policy Committee meeting next week, where policymakers are widely expected to hold the repo rate at 5.25 per cent but offer fresh guidance on the macro outlook. Economists the central bank's priorities may have shifted materially since its last meeting, with heightened geopolitical risks from West Asia, rising global energy prices, renewed pressure on the rupee, and the likelihood of downward revisions to growth projections shaping the policy narrative. Markets will also watch for the RBI's assessment of how prolonged external shocks could influence inflation, capital flows, and financial stability, even as it keeps rates unchanged after cumulative cuts of 125 basis points since February 2025.
Rupee Rebound
- India Rupee jumped the most since taper tantrum phase in 2013
- Rupee gained 1.82 per cent to 93.10 per dollar at close, the best performer in Asia today
- Local stocks reverse early losses to end higher
- RBI put restrictions on non-deliverable forward deals in INR post market hours Wednesday
- RBI: Banks can't offer NDF contracts on INR to clients
- RBI: Banks can't re-book FX derivatives cancelled after RBI's instruction
- Step intended to curb speculation on the rupee linked to the NDF market
- Certain banks were aggressively short on INR in NDF, pressured spot rupee levels
- Rupee touched an all-time low of 95.13 per dollar on March 30
- Key NSE 50 stock index ended higher, after falling as much as 2.2 per cent
- Foreigners are net sellers of $14 billion of local equities so far in 2026
Asian currencies versus U.S. dollar over past month
- South Korean won -4.96 per cent
- Thai baht -4.01 per cent
- Philippine peso -3.36 per cent
- Malaysia ringgit -2.79 per cent
MPC Expectations
- RBI is expected to hold repo rate at 5.25 per cent, will maintain Status Quo
- Considerations of the RBI likely to have shifted considerably since the last meeting
- RBI has cut rates by a cumulative 125bp since Feb 2025
- Economists see RBI being cautious given the West Asia crisis
- Focus likely to be on revisions in India growth and inflation expectations
- RBI's focus likely to be on impact of West Asia and changes to policy if war prolongs
- Global energy prices have jumped since the West Asia war
- RBI to likely give a perspective on Rupee pressure
- In its last meeting RBI was focused on transmission
- Priorities of the RBI likely to get highlighted given the changed macro
- Downward revision to GDP growth likely
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