Rupee Gains Big in One Day as RBI Pushes Back Dollar Demand

The Indian rupee demonstrated a quick and strong recovery on Wednesday, closing the day at 90.38 per US dollar, which is 65 paise up from the previous day’s closing rate of 91.03, thanks to the Reserve Bank of India’s decisive actions in the forex market.

At mid-session, the rupee’s gain was close to 1%, and it reached 90.08 at the highest point. This was a major bounce back for the currency, as it was the most significant single-day rise in the last two months, thus providing a little comfort after a continuous fall of weeks that had pushed it to the lowest levels in the history of the Indian rupee.

Dealers in currencies said the rupee's recovery was the result of the central bank's direct sale of dollars, which was intended to dispel the market's negative sentiment that the rupee's depreciation was unopposed and would last. The intervention followed rising speculation about when and how the RBI would intervene as the pressure on the currency had become more intense in the past few sessions.

The traders pointed to the earlier $5 billion dollar buy swap that the RBI had done and stated that it might have prepared the ground for Wednesday's activity in the spot market. The central bank’s tactic relied on surprise, a strategy it has frequently employed to create a positive atmosphere and also to slow down sharp one-way moves.

According to an analysis done by the State Bank of India, the influence of a weaker rupee on India's trade balance is still limited. The report mentioned that although there was a 19.4% increase in merchandise exports in November 2025, the gains from larger export volumes are usually offset by higher import fees leading to a smaller overall benefit.

The report pointed out that the dollar demand from the exporters had been huge due to the falling rupee and the demand was approximately $145 billion excess. It is assumed that the RBI has been very active in the foreign exchange market in recent months to cushion the demand pressure.

SBI made a projection of nearly $30 billion that the central bank might have sold in the forex market during the period from June to October 2025. Such measures were responsible for a decline in the country’s foreign exchange reserves which went down from $703 billion, a million dollars less than the peak, in the middle of June to approximately $687.2 billion by the beginning of December.

The report, however, predicted two different scenarios for the currency. One such scenario envisages that the rupee would continue its downward trend and would reach the value of 92.5 per dollar by mid-2026. The other scenario anticipates a rebound in the latter part of the next fiscal year, which would see the rupee appreciating by up to 6.5% with an average of 87 per dollar.

At the moment, the market’s attention is still on the actions of the Reserve Bank of India and whether the intervention made on Wednesday would be adequate to calm down the currency after the prolonged period of volatility.