FX.co ★ Rupee Sideways Near Three-Week Highs

The Indian rupee was trading around 89.6 per USD, maintaining its position near three-week highs due to a softer dollar and recent measures by the central bank that have steadied market sentiment. The currency has stabilized after its recovery from record lows. The dollar's decline to its lowest levels in several months has provided some relief to the rupee, although traders remain wary of sustaining these gains. The focus has now shifted to the forward market, following the Reserve Bank of India's announcement of a $10 billion dollar–rupee buy/sell swap. This measure is designed to absorb surplus dollar liquidity within the banking system. The announcement has already alleviated pressure on forward premiums, which had spiked in recent sessions because of an abundance of dollars and year-end balance sheet constraints. The swap is anticipated to temper the elevated premiums, especially for longer durations, and traders view the RBI's action as a strategic move to address market imbalances while keeping the spot rate relatively stable.