Indian Rupee Rebounds with Over 40 Paise Gain Against US Dollar Following Suspected RBI Action
The Indian rupee registered a significant recovery on Monday, February 2, appreciating by more than 40 paise against the US dollar. This upward movement is widely attributed to potential intervention by the Reserve Bank of India (RBI), which stepped in to bolster the domestic currency amidst volatile market conditions.
Forex Market Reacts to Union Budget Announcements and RBI Measures
The foreign exchange market resumed trading after a two-day weekend break, during which Finance Minister Nirmala Sitharaman presented the Union Budget in Parliament on February 1. The budget revealed a government borrowing program that exceeded expectations, with gross borrowing set at ₹17.2 lakh crore for the upcoming financial year (2026–27). This represents a 17% increase from the current fiscal year's borrowing of ₹14.61 lakh crore.
Despite the higher borrowing, the budget maintained fiscal prudence by setting the FY27 fiscal deficit at 4.3% of GDP and projecting a reduction in the debt-to-GDP ratio to 55.6%. These measures have been viewed as reinforcing policy credibility and providing a stable macroeconomic framework.
Rupee's Trading Dynamics and Expert Analysis
According to a Reuters report, the rupee was initially poised to open near its all-time low of 91.9875 against the US dollar. However, the central bank's intervention helped lift the currency to 91.77, marking a 0.2% gain from its closing level on Friday. The rupee continued to strengthen, reaching 91.55 during the trading session.
This recovery comes after the rupee slipped to a record low in the final minutes of Friday's trading session, ending the month with a 2.3% loss and on a fragile note. Amit Pabrai, Managing Director of CR Forex Advisors, commented that for the rupee, the budget offered reassurance rather than relief. He noted that while short-term pressures may persist, the broader message of fiscal credibility and growth continuity keeps medium-term prospects constructive, especially with India's Real Effective Exchange Rate (REER) still appearing undervalued.
Key Levels and Market Outlook for USD/INR
Pabrai highlighted that with USD/INR hovering just below 92, this level now serves as a crucial near-term pivot. A sustained break above it could potentially open the path toward the 92.20–92.50 range. However, he added that RBI support and disciplined fiscal signals may act as a ceiling, which could help the Indian rupee gradually drift back toward the 91.00–91.20 zone over time.
Ponmudi R, CEO of Enrich Money, echoed a positive bias for the rupee, stating that while short-term consolidation is visible near the 92.00 handle, the overall outlook remains favorable. He identified the 91.40–92.50 zone as a strong support band and suggested that a sustained move above 92.00–92.20 could trigger gradual upside extension. Ponmudi also noted that the firm USD/INR trend continues to amplify MCX bullion prices, even during phases of global profit booking.
The interplay between RBI intervention, budget announcements, and market sentiment will continue to shape the rupee's trajectory in the coming sessions, with analysts closely monitoring key technical levels and macroeconomic indicators.
