Rupee Hits 10-Week High at ₹94.49 Against US Dollar

The Indian rupee strengthened sharply against the U.S. dollar on Thursday, reaching a 10-week closing high of ₹94.49 per dollar as strong foreign-currency inflows and active intervention by the Reserve Bank of India supported the domestic currency.

The rupee closed at ₹94.4850 per U.S. dollar, up around 0.5% from the previous close of ₹94.98. It was the currency’s strongest closing level since June 25 and its biggest single-day gain since July 27.

Strong Dollar Inflows Boost Rupee

A major factor behind the latest appreciation has been the unusually strong response to the RBI’s special foreign-currency deposit and swap measures.

The measures attracted more than $136 billion in foreign-currency inflows by the end of August, significantly strengthening the central bank’s ability to manage currency volatility.

The increased availability of dollars has reduced some of the pressure that had weighed on the rupee earlier this year.

RBI Steps Up Market Intervention

Market participants also reported that the RBI has become more active in the spot foreign-exchange market.

Rather than simply defending the rupee when it weakens sharply, the central bank now has greater flexibility to manage movements in both directions, using its stronger dollar position to smooth excessive volatility.

The RBI’s approach comes as India’s foreign-exchange reserves have already reached a record $729.3 billion, giving policymakers a substantial external buffer.

Rupee Gains Despite Oil Risks

The currency’s rise comes despite an important challenge: higher crude oil prices.

Renewed tensions involving the United States and Iran have pushed Brent crude higher, creating risks for oil-importing economies such as India.

A sustained increase in oil prices could raise India's import bill, widen the trade deficit and increase demand for dollars from Indian importers. That could eventually put renewed pressure on the rupee.

Importers were already seen buying dollars during Thursday’s session, limiting some of the rupee’s earlier gains.

Global Interest Rates Remain Important

The rupee is also being influenced by expectations surrounding U.S. monetary policy.

Higher U.S. Treasury yields and growing expectations of a possible Federal Reserve rate hike could strengthen the dollar and make emerging-market currencies more vulnerable.

The U.S. 10-year Treasury yield was around 4.78%, close to a three-year high, while market expectations for a September Fed rate increase had risen significantly.

This means the rupee’s recent strength could face a test if U.S. economic data reinforces expectations for tighter monetary policy.

Banking System Faces Liquidity Challenge

The large foreign-currency inflows are also creating a separate challenge for India's financial system.

When the RBI absorbs foreign currency and releases rupees into the domestic system, banking liquidity can increase significantly.

India’s banking-system liquidity surplus reached a record ₹9.7 trillion on September 2, surpassing the previous high recorded in September 2021.

The RBI is therefore facing the dual task of supporting currency stability while preventing excessive rupee liquidity from disrupting short-term interest rates.

What Comes Next for the Rupee?

The rupee’s move to ₹94.49 marks a significant improvement from its recent weaker levels, but analysts remain cautious about assuming that the rally will continue uninterrupted.

Crude oil prices, U.S. interest-rate expectations, foreign-currency flows and RBI intervention are likely to remain the key drivers.

The immediate strength of the rupee reflects the powerful impact of the recent foreign-currency inflows and the RBI’s increased ability to manage the foreign-exchange market.

However, geopolitical tensions and higher oil prices could create renewed pressure.

For now, the rupee has secured its strongest closing level in 10 weeks, giving India's currency a notable boost after months of external pressure.

About TVR

TVR: The Voice Of Reform is an independent digital news platform covering major developments across India and around the world.

Editorial Note

Our articles are prepared using publicly available information and verified reporting. We aim to present news accurately, independently and responsibly. Information may be updated as new facts emerge.

How Did the Delhi Sultanate Begin? The Story Behind the Rise of Turkish Rule in North India

H ow Did the Delhi Sultanate Begin? The Story Behind the Rise of Turkish Rule in North India At the beginning of the 13th century, northern India entered a major new political era. The Delhi Sultanate , which eventually ruled large parts of the subcontinent for more than three centuries, did not appear suddenly. Its origins can be traced to the campaigns of Muhammad Ghori , the defeat of major North Indian powers, and the rise of his trusted commander Qutb-ud-din Aibak . When Muhammad Ghori died in 1206 , Aibak established independent authority over the Ghurid territories in northern India. That year is generally regarded as the beginning of the Delhi Sultanate. India Before the Delhi Sultanate Northern India in the 12th century was politically divided. Several Rajput kingdoms controlled different regions, while powerful states existed in other parts of the subcontinent. There was no single political authority controlling all of northern India. This situation created opportunities for ...

The Voice Of Reform

Search This Blog