The Indian rupee staged a recovery on Friday, gaining 15 paise from its all-time low to close at 87.44 against the US dollar. This rebound came after the Reserve Bank of India (RBI) announced a 25-basis point cut in the repo rate to 6.25%, marking its first rate reduction since May 2020.
Despite the temporary relief, the rupee faced a turbulent week, slipping nearly 1% due to global trade uncertainties and sustained foreign portfolio outflows. Earlier in the week, the currency had breached the 87-mark, touching a historic low.
The RBI actively intervened in the forex market to stabilize the rupee, with traders noting dollar sales by state-run banks, likely on behalf of the central bank. Additionally, India’s foreign exchange reserves surged for the second consecutive week, reaching $630.6 billion as of January 31, bolstering market confidence.
However, analysts warn that the rupee may remain under pressure due to persistent global economic challenges and foreign fund outflows. While the RBI’s rate cut aims to stimulate economic growth, its immediate impact on currency valuation remains limited.
