The Indian rupee concluded Thursday's trading session at 90.0175, marking a decline from the previous day's close of 89.88, despite active intervention by the Reserve Bank of India. The currency experienced significant intraday volatility as multiple factors influenced its trajectory throughout the session.

Market Performance and RBI Intervention

The rupee's trading pattern reflected the ongoing tug-of-war between central bank support and market pressures. Key movements during the session included:

Bankers confirmed that the RBI intervened for the second straight day, providing temporary support that helped the currency recover from its opening level to 89.75. However, this intervention proved insufficient to sustain the rupee's strength against mounting external pressures.

Market Dynamics and Trading Sentiment

Traders observed that currency movements have become increasingly dominated by central bank actions. "Market moves have again started to be dominated by one large player, and the currency changes direction based on the presence or absence of RBI," noted a trader with a foreign bank.

Bankers expressed skepticism about the sustainability of the rupee's recovery to 89.75 from the 90.30 level hit on Tuesday. Market participants were actively advising importer clients to hedge their positions during periods of rupee strength, indicating cautious sentiment among corporate users.

External Pressures and Market Factors

Anil Bhansali, head of treasury at Finrex Treasury Advisors, identified multiple factors weighing on the currency: "The combined effect of 500% tariffs proposed by U.S., fall in equity markets, RBI short forward positions kept the pressure on the rupee consistently even though RBI came intermittently to sell dollars."

The equity markets continued their downward trajectory for the fourth consecutive session, with the Nifty 50 Index dropping 1.00% amid foreign outflows. The selling pressure was particularly pronounced in export-oriented firms as US tariff worries intensified.

Forward Market Activity

The forward currency market showed increased activity as market participants positioned for continued volatility. Bhansali noted that "rupee premiums again have started to move up as importers bought and paid for forward positions of their import holdings," indicating heightened hedging demand from corporate users.

Upcoming Market Events

Market attention is now focused on the US non-farm payrolls report scheduled for release after Indian market hours on Friday. This data is expected to provide fresh insights into the US labor market conditions and potential Federal Reserve policy direction for 2026, which could influence global currency movements and capital flows.

The Indian Rupee opened at 89.96 per US dollar in the latest trading session, later strengthening to 89.90, compared to the previous close of 89.87. The currency's movement reflects a complex interplay of domestic and global factors, including active Reserve Bank of India (RBI) intervention, rising crude oil prices, and foreign fund outflows.

Currency Performance and RBI Intervention

The rupee's trading pattern was largely shaped by central bank intervention to manage volatility. According to Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, the RBI actively capped dollar strength at 90.30 levels and sold dollars at 90.22 to prevent further appreciation despite persistent demand from importers and foreign investors.

Market Pressures and Global Factors

The rupee faces upward pressure from multiple sources, including a strengthening US dollar supported by robust US services data. Rising crude oil prices have added to the currency's challenges, with Brent crude futures trading at $60.19 per barrel, up 0.38% in early trade. Higher oil costs typically increase India's import bills and weigh on the domestic currency.

Equity Market Impact and Foreign Flows

Domestic equity markets have contributed to rupee pressure, with the Sensex declining 255.86 points to 84,705.28 and the Nifty slipping 65.90 points to 26,074.85. Foreign institutional investors (FIIs) offloaded equities worth ₹1,527.71 crore in the previous session, adding to the currency's downward pressure through capital outflows.

Market Outlook and Central Bank Strategy

Traders expect continued RBI intervention to manage extreme rupee volatility. Market experts suggest that while the rupee's upside appears limited due to intervention measures, the downside could extend to 89.50 per dollar if the central bank continues strategic dollar sales and liquidity management. The dollar index was slightly higher at 98.69, reflecting broad dollar strength against major currencies, which continues to influence the rupee's near-term trajectory.