India Rupee roars back on RBI’s support, up most in seven months

India’s central bank stepped in forcefully to support the rupee, propelling it to the biggest gain in seven months in a move that some analysts said was intended to punish those betting on a one-way slide in the currency.

The rupee rose as much as 1%, the most since May 23, to 90.0963 on Wednesday, after closing at a record low in the previous session. The Reserve Bank of India intervened through dollar sales in the local market, according to people familiar with the transactions.

The move follows the rupee’s string of record lows in recent weeks, which had sparked debate over why the RBI hasn’t stepped in more forcefully to support the currency.

Traders said the authority likely intervened after it bought $5 billion of dollars via a foreign-exchange swap on Tuesday.

The central bank has been guarded about its intervention strategy and goes to lengths to ensure that market participants don’t have signs of when it may step in.

The unpredictability maximizes the impact of the RBI’s dollar sales — the local currency has gained around 1% on each of the last few instances of strong intervention.

Before today’s jump, the rupee was down almost 2% this month as foreign outflows from local stocks and bonds due to delays in finalizing a trade deal with Washington dented sentiment.

Global funds have pulled about $18 billion from local equities this year. The withdrawals have worsened the strain on the rupee while the 50% US tariffs threaten exporters’ dollar inflows. At the same time, firm imports are keeping demand for the greenback elevated.