Indian Rupee Hits 4-week High

The Indian rupee strengthened to around 94.9 per dollar, reaching four-week highs as a pullback in US Treasury yields and reduced Federal Reserve rate hike expectations supported the currency, alongside aggressive Reserve Bank of India intervention and measures to curb dollar demand and speculative trading. US yields reversed their initial rise following stronger-than-expected September inflation data, while the probability of an October Fed rate hike fell from nearly 60% to below 25%. The RBI has signalled its willingness to take further action to stabilise the rupee after raising interest rates by 25 basis points last week and stepping up dollar sales. However, analysts cautioned that sustained gains remain uncertain amid heavy energy import dependence, weak foreign capital inflows, and persistent portfolio outflows, with further rate hikes and policy changes among the options to address underlying currency pressures.

The Indian Rupee touched 95.48 against the USD, the highest since September 2026. Over the past 4 weeks, US Dollar Indian Rupee lost 0.36%, and in the last 12 months, it increased 7.55%.

The Indian rupee hovered around 95 per dollar after rallying for three consecutive sessions as the Reserve Bank of India’s measures to curb dollar demand and speculative trading continued to support the currency. The rupee surged 1.5% over the two sessions through Tuesday, closing 49 paise higher at 95.28 per dollar, as RBI Governor Sanjay Malhotra signalled that further measures to support the currency remained an option. The RBI has redirected dollar demand from three state-owned oil companies to a special facility, tightened rules on foreign exchange derivatives, and imposed risk margins on qualifying transactions. However, uncertainty over the curbs has prompted some banks to suspend forward quotes, widening bid-ask spreads and shifting activity to offshore markets. Elevated oil prices and weak capital flows remain key headwinds, with the rupee still down about 6% this year, while markets weigh the prospect of further monetary tightening.