The Indian rupee has shown signs of stabilising after recent sharp fluctuations, with traders observing a possible near-term equilibrium around the 93 per US dollar level.

This follows a period in which the currency briefly weakened to around 95 amid heightened uncertainty before recovering with support from the Reserve Bank of India (RBI).

RBI intervention supports currency stability

Market participants indicate that the RBI has played a role in supporting the rupee through measures aimed at unwinding arbitrage positions and managing liquidity in the forex market. These actions have helped reduce extreme volatility, with recent trading sessions showing a narrower movement range compared to earlier swings.

Forex market sentiment and trader outlook

Bankers and currency traders suggest that while the rupee has stabilised for now, its trajectory remains sensitive to both domestic policy signals and external developments. Position unwinding by banks is expected to provide some support, but traders note that sustained movement above current levels may depend on broader global conditions.

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Geopolitical risks influencing the rupee

Ongoing geopolitical tensions, particularly involving Iran and the broader West Asia region, are seen as key risk factors for the currency. Any escalation could impact global oil prices, which in turn would affect India's import bill and put downward pressure on the rupee. Rising crude prices have already been observed in global markets, adding to uncertainty.

Inflation and growth outlook under scrutiny

In parallel, reports suggest that the RBI may revise its inflation projections upward in its upcoming policy review, reflecting the impact of higher crude prices and currency pressures. At the same time, GDP growth forecasts could face downside risks due to global uncertainties, including geopolitical tensions and their potential effects on trade and investment.