Rupee Recovers Strongly After Hitting Record Low, Becomes Asia’s Best Performer
The Indian rupee witnessed its biggest single-day gain in over two years, recovering 21 paise to reclaim the 87 mark against the US dollar on February 11. The sharp rebound comes after the Reserve Bank of India (RBI) reportedly intervened heavily to curb volatility following the rupee’s record low of 87.9563 per dollar on February 10.
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Highlights of Rupee’s Recovery
- Rupee surged by nearly 1%, marking its strongest rally since November 2022.
- The currency opened at 87.35 per dollar and strengthened to 87.0750, compared to the previous close of 87.48 per dollar.
- Heavy RBI intervention helped stabilize the rupee, preventing further depreciation.
- Rupee became Asia’s best-performing currency on Tuesday amid strong recovery.
- The record low was triggered by US President Donald Trump’s new tariff policies impacting global trade sentiment.
RBI’s Role in Supporting the Rupee
The Reserve Bank of India (RBI) intervened aggressively to prevent excessive depreciation and stabilize currency markets.
- Bloomberg News quoted Anindya Banerjee, currency strategist at Kotak Securities, stating,
“The RBI has been heavily intervening since yesterday morning to support the rupee.” - Experts believe that the RBI’s intervention will continue to counter extreme volatility and prevent a one-way depreciation trend.
- The central bank’s forex reserves were likely utilized to stabilize the currency amid strong foreign institutional investor (FII) outflows.
Impact of Trump’s Tariffs on the Rupee
- The rupee’s record low of 87.9563 per dollar on February 10 was driven by US President Donald Trump’s new tariff plans, which increased trade uncertainties.
- Trump raised aluminum tariffs from 10% to 25% and reinstated a 25% duty on steel imports, affecting global trade flows and emerging market currencies.
- India is closely monitoring the impact of US trade policies and may take proactive measures to safeguard its economic interests.
PM Modi’s US Visit: Key Focus on Trade and Bilateral Relations
Indian Prime Minister Narendra Modi is set to visit the US on February 12-13, with trade and economic cooperation high on the agenda.
- The visit is expected to strengthen bilateral ties across key sectors, including technology, trade, defense, energy, and supply chain resilience.
- MUFG Bank noted that India has been proactively reducing tariffs and engaging in negotiations to maintain access to H1-B visa programs and leverage opportunities from the US-China trade war.
Rupee Outlook: What’s Next?
- Analysts suggest that RBI’s continued intervention and foreign exchange reserves management will help contain volatility.
- Global trade tensions, FII flows, and US economic policies will remain key factors influencing the rupee’s movement.
- The rupee’s resilience will depend on broader market sentiment, crude oil prices, and domestic economic growth.
