RBI seen resorting to heavy intervention again to support rupee against dollar

The Reserve Bank of India (RBI) has once again resorted to heavy intervention to strengthen the rupee past the 90/dollar mark after a dip at the open, six traders said on Wednesday.

An intervention by the Reserve Bank of India (RBI) strengthened rupee past the 90/dollar mark on Wednesday, 7 January 2026. (Reuters)

The rupee traded at 89.9325 per US dollar, up 0.26% on the day, having slipped to 90.2250 shortly after the open. The currency hit an intraday high of 89.7550 on the interbank order-matching system.

“There was clearly some build-up in (long dollar) positions, although it’s hard to say whether it had become excessive,” a trader at a private sector bank said. “Maybe the larger concern was that it (rupee/dollar) was moving in a very one-way fashion.”

In previous episodes, the RBI's intervention typically came amid a build-up of speculative long-dollar positions and expectations of continuous rupee depreciation, according to bankers who track the forex market.

Wednesday's intervention followed a familiar playbook that the RBI repeatedly used last year, when it stepped in aggressively to push the rupee higher, aiming to disrupt one-way moves. The rupee continues to face headwinds from persistent foreign selling of Indian equities, a trend that has extended from 2025 into 2026, alongside lingering uncertainty over an India-US trade deal.

Unlike Tuesday’s session, in which opinion was divided about whether the RBI was present in the market, Wednesday’s move left little room for doubt about whether it was involved. "Today the move was too quick for it to be anything else.” said another trader at a private sector bank.

Prior to the RBI-engineered recovery on Wednesday, the rupee had fallen about 1% against the US dollar over the past two weeks.