The Indian rupee strengthened on Monday, recovering from Friday’s record low, helped largely by what traders believe was early intervention from the Reserve Bank of India. By 10:20 a.m. IST, the rupee was trading at 89.1625 per dollar, up 0.3 percent from its previous close, after having fallen to an unprecedented 89.49 on Friday.
According to traders, the RBI likely stepped in before domestic markets opened, enabling the currency to pull back from its steep decline. The sharp fall late last week surprised markets, especially after the central bank stopped defending the 88.80 level, a threshold it had protected for nearly two months. Portfolio outflows, uncertainty around the U.S.–India trade agreement, and the RBI’s reduced intervention combined to pressure the rupee.
This abrupt drop also pushed short-term volatility sharply higher, with the one-month implied volatility of the dollar–rupee pair rising above 4 percent for the first time since early September. Amit Pabari of CR Forex said the breakout above 89 suggests the pair may now stabilize within a 88.90–90.20 range.
The rupee’s weakness spilled over into the bond market on Friday, lifting yields, though the 10-year yield edged slightly lower to 6.5578 percent on Monday. In global markets, the dollar index held near 100.2, while most Asian currencies softened despite renewed expectations of a U.S. rate cut in December. Odds of a 25-basis-point rate cut next month have jumped to nearly 70 percent, up from around 45 percent a week earlier, according to CME’s FedWatch tool.