“The correction can be attributed to likely intervention by the central bank. This led to a huge move from 91.07 to 89.98 within a few minutes in the morning on low volumes. After that, the coin fell above the 90 level,” said KN Dey, a veteran forex market consultant. The currency closed at 91.03 per dollar on Tuesday, breaking the 91-level barrier for the first time ever. The all-time low was 91.08 on Tuesday.
Before Wednesday, the rupee depreciated around 2.5% since November 19 with the central bank largely on the sidelines, forex market experts said.
“India has comfortable foreign exchange reserves, which gives the RBI the power to intervene in the market whenever it deems necessary,” Rajani Sinha, chief economist at CareEdge Ratings, said on Wednesday.
At the end of December 5, the forex inventory of the fourth largest global economy stood at $687.260 billion, accounting for eleven months of imports. Sinha predicted that the rupee would move around the 89-90 level in FY27. Axis Bank Chief Economist Neelkanth Mishra said on Tuesday that the currency could reach the 92 level by June 2027.
“High volatility in the forex market is expected to continue amid changing economic and geopolitical headlines. Technically, USD/INR has immediate resistance at 90.60 and support at 89.70,” said Dilip Parmar, an analyst at HDFC Securities.
Axis Bank Chief Economist Neelkanth Mishra attributed the rupee’s fall on Tuesday to speculation and not changes in fundamentals.
Economists expect the balance of payments to remain strong, with the current account deficit likely to be limited to 1.2% of GDP in FY26. India remained the fastest growing major economies with trend growth of around 7%.
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