Indian rupee bounces back, hits 7-m high

The Indian rupee recovered on Wednesday, bouncing back from a record low in the previous session, to record its strongest performance in over seven months, supported by a weaker US dollar and significant dollar sales by foreign banks.

The rupee ended at 86.3625 against the US dollar, marking a 0.3 per cent increase on Wednesday, its highest one-day percentage gain since June 3, 2024.

The currency hit a record low of 86.6475 in the last session but rebounded on Wednesday due to the dollar index’s drop from a two-year high and dollar sales by two major foreign banks, possibly for custodial clients, according to traders.

Despite the day’s gains, the rupee has weakened by approximately three per cent since Trump’s victory in the presidential elections in November, causing the dollar to surge. India’s slowing growth has also contributed to pressure on the local unit.

Due to the currency’s rapid decline, analysts are delaying expectations for interest rate cuts by the Reserve Bank of India (RBI) as concerns about inflation grow with the weaker currency.

Attribution: Reuters

Subediting: M. S. Salama