Central bank was seen buying dollars around noon on Tuesday, after several months of selling dollars to limit depreciation.
The rupee traded in the range of 90.04/$1 and 90.51/$1 on Tuesday, while foreign portfolio investors bought Rs 4,900 crores in February so far. Treasury heads expect further capital infusion from foreign players after the trade deal.
“The outlook from the trade account doesn’t change much as both countries would benefit from the lower duties, but capital flows could see an improvement as the deal lifts overall sentiment. Foreign capital, which had stayed on the sidelines over the past few months, may begin to return, leading to inflows into both equity and debt markets,” said Shailendra Jhingan, head of treasury at ICICI Bank.
Jhingan expects the rupee to trade between 90/$1 to 89.50/$1 by March end.
Dealers said the market will closely monitor the extent to which RBI would allow the local currency to strengthen in the coming days. The RBI has intervened to prevent the rupee from falling past the psychologically significant level of 92/$1, thus increasing its short positions. RBIs short positions stand at $62.3 billion as of December 2025
“The RBI was buying at 90.05 levels and they (RBI) may be looking to square up their forward book as their short positions are large. There are many details of the trade deal that are uncertain, and hence we now have a stop loss of 90.75/$1,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.Volumes of trade on Tuesday were not unusually large, as traders await for more details of the deal.
“While importer participation was anticipated, actual flows remained limited. Exporters, meanwhile, stayed on the sidelines amid relatively strong rupee levels. Further details on the trade front may be required on bilateral trade elements and also any comment on import of Russian oil from India would provide a firm direction on rupee. For USDINR, 89.50 levels act as a support while now 91.20 acts as a resistance.” said Kunal Sodhani, head of treasury at Shinhan Bank India.
