FX.co ★ Indian Rupee Stabilizes

The Indian rupee has stabilized around 89.8 per USD, maintaining its recent gains due to a generally weaker dollar and strategic interventions by the Reserve Bank of India (RBI) that have bolstered market sentiment. Having previously crossed the 90-per-dollar threshold earlier this month, the rupee has shown signs of stabilization, entering a holding pattern as the dollar declined to a multi-month low. This shift has provided the rupee with some breathing space, with analysts suggesting that the most severe phase of depreciation may have passed. Contributing factors include improved risk appetite among investors and RBI intervention measures, such as a USD 5 billion dollar-rupee buy-sell swap designed to enhance liquidity. Furthermore, India's economic fundamentals are robust, with inflation dropping below 1% and GDP growth exceeding expectations by reaching its highest level in six quarters. Despite these positive developments, the rupee has depreciated approximately 5.2% so far this year, marking the largest decline among major Asian currencies. This downward pressure stems from weak investment flows, high import-driven dollar demand, significant US tariffs, and ongoing uncertainty surrounding Indo-US trade negotiations.