Indian Rupee Bounces Back: RBI's Market Action Stabilizes USD/INR Below 91

The USD/INR pair has pulled back sharply from its record high, with the exchange rate dropping over 1% to settle near 90.00 this Wednesday. For those wondering about conversions like 10000 dollar to inr, the recent movement reflects significant volatility in the currency pair. The Reserve Bank of India’s direct intervention in both spot and Non-deliverable Forward (NDF) markets triggered the reversal, as state-run banks stepped in aggressively to supply US dollars on the central bank’s behalf, according to reports from market participants.

Why the Indian Rupee Needed Support

The currency had been bleeding value throughout 2024, sliding nearly 6.45% year-to-date and becoming the weakest performer across Asia against the dollar. Two major headwinds have hammered the rupee: first, the absence of a concrete US-India trade agreement has kept foreign investors cautious, leading to consistent capital outflows. Second, the trade dispute has pushed Indian importers to chase dollars, intensifying selling pressure on the domestic currency.

The numbers tell the story—Foreign Institutional Investors (FIIs) have been net sellers for seven out of the past eleven months. December alone saw FIIs dump Indian equities worth Rs. 23,455.75 crore, signaling sustained pessimism toward the Indian market.

However, RBI Governor Sanjay Malhotra has signaled patience. In a Financial Times interview, he indicated that interest rates will “remain accommodative for the foreseeable future,” while also flagging that recent GDP surprises have prompted the central bank to recalibrate forecasts. Notably, he warned that a US-India trade resolution could swing GDP by as much as 0.5%—a reminder of how much hangs in the balance.

US Dollar Rebounds Despite Weak Economic Signals

On the flip side, the US Dollar Index (DXY) climbed 0.17% to near 98.40 on Wednesday, recovering from an eight-week trough reached earlier in the week. The rebound came despite a mixed economic picture stateside.

Labor market data for October-November painted a concerning portrait: unemployment jumped to 4.6%—the highest since September 2021—while job creation stuttered. October saw 105,000 jobs shed before November managed to add just 64,000 positions. Retail spending data landed flat month-on-month, missing the expected 0.1% rise, and the S&P Global Composite PMI for December slowed to 53.0 from November’s 54.2.

Yet market observers believe the Fed won’t budge. The weak data is largely attributed to distortions from the government shutdown, and CME FedWatch tools show minimal odds of rate cuts at the January 2026 meeting. All eyes now turn to Thursday’s Consumer Price Index print for November—likely the next catalyst that could reshape expectations around Fed policy and, by extension, the dollar’s trajectory.

Technical Picture: USD/INR Finds Its Footing

From a technical standpoint, USD/INR is trading at 90.5370 with price hovering above the 20-day Exponential Moving Average (EMA) at 90.1278. The Relative Strength Index (RSI) sits at 59.23, above the neutral 50 level, confirming that bullish momentum persists despite cooling from recent overbought extremes in the 70s.

The immediate support zone clusters around the 20-EMA band (89.9556–89.8364). As long as USD/INR holds above this area, the bias remains tilted toward higher levels. A daily close below would signal consolidation territory and potentially open the door to further rupee strength. For now, the trend structure remains intact, though the pullback in RSI suggests some caution is warranted on extended rallies.

The Broader Picture on the Indian Rupee

The rupee’s sensitivity to external shocks—crude oil prices, dollar flows, FII movements, and RBI policy—means its trajectory hinges on multiple variables simultaneously. Domestic interest rates, inflation management, and the central bank’s willingness to intervene will all play roles in determining whether the recent stabilization holds or the pair resumes its uptrend toward 91.56 again.