Rupee Recovery: 3 reasons why the Indian currency jumped 2% to hold above 93/$ level – Market News

The second week of April has been relatively stable for the Indian rupee, which has hovered within the 92–93 range against the US Dollar. The steady movement came on the back of recently imposed RBI norms and optimism over the ceasefire news, causing oil prices to slip from their record high levels.

Within a span of nearly 10 days, the currency appreciated by more than 2% against the US dollar, trading near the 92–93 level. This comes after it had breached the 95 mark on March 30.

So what exactly led to the strengthening of the currency?

Here are 3 key reasons as to why the Indian rupee gained momentum again:

1. Policy changes by RBI to reduce speculative trade

Policy measures imposed by RBI to curb speculative trade on open rupee positions helped lift sentiment for the currency. On March 27, RBI directed banks to cap net open rupee positions in the onshore deliverable forex market at $100 million daily by April 10.

However, the central bank was prompted to impose even tighter norms as, on the next trading day, March 31, the currency breached past the 95 level against the US Dollar, touching an intraday record low of 95.22.

Following the volatility, RBI on April 1 issued a directive to put a cap on banks in terms of offering rupee non-deliverable forwards (NDFs) contracts to resident and non-resident clients, seeking to stabilise volatility in the currency.

The central bank also stated that authorised dealers would not be allowed to permit the rebooking of cancelled forward contracts. This measure came into effect from April 2, and the currency posted its best single-day gain since September 2013.

2. Optimism over ceasefire news – slip in oil prices

On April 8, a two-week ceasefire was announced between the US and Iran, over which Iran agreed to reopen the crucial trade route—the Strait of Hormuz. This caused a slip of nearly 13% in oil prices, which fell below their highs of the $100/bbl mark.

The rupee witnessed some relief as India is a net importer of oil and energy, and imports a large chunk of its energy flows from the Middle East.

A slip in oil prices benefits the domestic currency by lowering import bills, reducing pressure on the current account deficit, and helping calm inflation pressure.

Currently, Tehran has halted tanker movement through the Hormuz route, citing a breach of its 10-point plan, so the currency still remains sensitive to the six-week-long conflict.

3. Dollar index falling from record highs

Easing geopolitical tensions reduces the safe-haven demand for dollars. Prior to the announcement of the conditional ceasefire, the dollar index was trading near record high levels of the 100 mark. Now, it has slipped by more than 1%, trading near the end of the 98 mark.

A fall in the dollar index makes emerging market currencies like the rupee more attractive for overseas investors, attracting foreign capital inflows.

Rupee still vulnerable to FPI outflow

Despite a steady week, the currency still remains vulnerable to FPI outflows. According to NSE data for April 9, FIIs were net sellers of domestic equities worth Rs 1,711 crore. So far in 2026, foreign investors have withdrawn around Rs 1.76 lakh crore from the Indian market.

Additionally, uncertainty surrounding the West Asia conflict keeps emerging market currencies like the rupee under pressure, as oil prices continue to trade at elevated levels.

“Looking ahead, the picture for the rupee appears to be changing. With most of the NOP (net open positions)-related support now fading and global uncertainties still elevated, the scope for further strength seems limited,” said Amit Pabari, Managing Director at CR Forex Advisors.

Outlook for rupee

Giving a longer term range, “USD-INR is likely to find a base in the 92.20–92.50 zone, with a gradual move higher towards 93.50–94.00 levels,” Pabari added.