The rupee made a strong comeback, gaining 65 paise or 0.74%, to close at 86.83 against the dollar on Tuesday. This is rupee’s biggest gain in over two years against the dollar, helped by Reserve Bank of India’s (RBI) intervention. The RBI is estimated to have sold $11-12 billion in the FX market in the last two days to defend the local currency.
The rupee touched a high of 86.63 during intraday trade on Tuesday before closing at 86.83 against previous day’s close of 87.48, posting its biggest single day gain since November 11, 2022.
“Today’s appreciation in the rupee was mainly because of Reserve Bank’s strong intervention. The RBI was seen selling dollars at around 87.30 level and continued to 86.63,” said a forex dealer with public sector bank. “RBI’s presence was felt in both the spot and forward markets,” he added.
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The recovery in the domestic currency was seen despite sharp selling by foreign investors. FPIs have sold nearly $1.4 billion in the past five trading sessions.
“The RBI may have sold $7 billion yesterday, and has again possibly intervened today to the tune of $4 billion,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors. The figures are based on estimates provided by interbank brokers, he said.
The apex bank intervenes in the forex market to reduce the any sharp volatility in the rupee. Instead of targeting any specific level for rupee, the central bank focuses on lowering sharp fluctuations.
RBI’s support also helped rupee to emerge as the best performing currency in Asia on Tuesday. Thai Baht was the worst performing currency, falling 0.5%, followed by Indonesian Rupiah (0.18%), Philippine Peso (0.17%), South Korean Won (0.12%) and Japanese yen by 0.07%.
While the RBI’s intervention helped the rupee on Tuesday, it has declined by 1.4% in 2025 so far, making it the second worst performing currency in Asia after Indonesian Rupiah. Rupee has come under pressure due to multiple factors including fears of a trade war, continued selling of stocks by foreign investors, and the policy easing by the RBI.
Experts say that the recent declines have helped correct some of the overvaluation in the rupee vis-a-vis its trading partners.
“The rupee is much closer to its fair value and the RBI’s intervention today has provided some respite, suggesting that sharp volatility would not be tolerated,” said Garima Kapoor, an economist with Elara Securities.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose to 108.25 on Tuesday from 108.04 on Friday. The benchmark 10-year bond yield ended lower at 6.69% on Tuesday from 6.71% on Monday.
