Volatility returned to the currency market on Thursday as the Indian rupee closed lower, with external pressures outweighing central bank support. Fresh intervention by the Reserve Bank of India failed to fully counter rising concerns around global trade tensions and sustained foreign fund outflows.
The rupee opened at 89.95 and briefly strengthened to 89.75 after the RBI stepped in for the 2nd straight session, according to bankers. However, the recovery proved short-lived. The currency later slipped and settled at 90.0175, compared with the previous close of 89.88 on Wednesday.
“Market moves have again started to be dominated by one large player, and the currency changes direction based on the presence or absence of RBI,” a trader with a foreign bank said.
Earlier in the session, market participants had already flagged doubts over the durability of the rupee’s rebound from the 90.30 level touched on Tuesday. Bankers said importers were advised to hedge while the currency showed temporary strength.
“The combined effect of 500% tariffs proposed by U.S., fall in equity markets, RBI short forward positions kept the pressure on the rupee consistently even though RBI came intermittently to sell dollars,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
“The rupee premiums again have started to move up as importers bought and paid for forward positions of their import holdings.”
Equity markets added to the pressure on the currency. Domestic stocks fell for the 4th consecutive session, with the Nifty 50 Index declining 1%. The drop came amid persistent foreign outflows, driven by intensifying U.S. tariff concerns and heavy selling in export-oriented stocks.
Global political developments also weighed on sentiment. U.S. President Donald Trump is expected to allow a bipartisan sanctions bill targeting countries doing business with Russia to move ahead in Congress. Republican Senator Lindsey Graham said the proposal could be put to a vote as early as next week.
Looking ahead, market focus is shifting to the U.S. non-farm payrolls report, scheduled for release after Indian market hours on Friday. The data is closely watched and is expected to provide fresh signals on the U.S. labour market and the Federal Reserve’s policy direction for 2026.
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