After experiencing continuous depreciation in the past few weeks, the Indian rupee unexpectedly rose, setting the largest increase in two years, and the market generally believes that the Reserve Bank of India played a key role behind it. On Tuesday, the rupee rose nearly 1% to 86.6362 per US dollar, becoming the strongest performing currency in Asia.

The rebound of the rupee this time has eliminated speculative positions in the market. "- Ashhish Vaidya, Head of Finance at DBS Bank

The rebound of the rupee marks a strong market intervention by the Reserve Bank of India. According to market estimates, the Reserve Bank of India may support the rupee exchange rate in the short term through large-scale foreign exchange sales, estimated to have sold about $7 billion yesterday and may have intervened again by about $4 billion.

The recent rise in the rupee is seen as a strong response by the Reserve Bank of India to the recent currency depreciation. Since the appointment of the new governor Sanjay Malhotra in December last year, the market has raised doubts about the possibility of the Reserve Bank of India adopting a more loose monetary policy, especially after the Reserve Bank of India first proposed a more flexible exchange rate policy, which has intensified concerns about further depreciation of the rupee.

This rise has smoothed out the recent depreciation trend and eased market tension. "- Ashhish Vaidya, Head of Finance at DBS Bank

However, the rebound of the rupee did not completely eliminate market anxiety. Previously, due to the strengthening of the US dollar and the impact of US President Trump's tariff policies, the rupee continued to depreciate against the backdrop of global trade concerns.

The uncertainty of US tariff policies and their pressure on global emerging market currencies still exist, therefore, despite the short-term support provided by central bank intervention, the future trend of the rupee still faces challenges.

The Reserve Bank of India may have sold $7 billion in foreign exchange this time, which has stabilized the market, but the external environment is still full of uncertainty. "- Anil Kumar Bhansali, Chief Financial Officer of Finrex Treasury Advisors

FXCUE Editor's Opinion:

The rebound of the Indian rupee demonstrates the effective intervention of the Reserve Bank of India in stabilizing the currency market, but the future trend of the rupee remains uncertain under global economic pressure and the impact of US tariff policies. The market will continue to pay attention to how the Reserve Bank of India maintains currency stability in a complex external economic environment. Meanwhile, investors should be vigilant about the potential sustained impact of global economic turbulence and trade concerns on the Indian economy.