Rupee extends rise but falters past 95/$ on importer hedging, outflows

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Rupee’s rally stalls as importer hedging and outflows cap gains even after RBI steps and hawkish signals; traders eye US inflation data for the next move.

By Reuters

Updated - October 16, 2026 at 05:09 PM.

The Indian rupee rose for a third consecutive ​session on Wednesday to hit a more than one-month peak ‌as the central bank followed up tough ​regulatory measures with hawkish commentary.

However, the gains ⁠were capped below the 95 per dollar mark as dollar demand linked to importer hedging and portfolio outflows persisted. ‌The rupee climbed to a peak of 94.77 in early trading before settling 0.1% ‌higher at 95.15.

"A durable turnaround in the ‌currency ⁠will also require negative global triggers to subside. ⁠The latest announcements may not fully quell speculation over further policy action," DBS said in a note.

"Should depreciation pressures intensify again, ​markets are likely to price ‌a higher probability of a front-loaded and more aggressive rate-hike cycle."

Reserve Bank of India Governor Sanjay Malhotra has defended India's recent forex curbs as ‌an effort to discourage speculative bets and said ​the central bank is ready to take additional steps to ensure orderly rupee movement.

He ⁠added that while monetary policy is not typically deployed to address financial stability concerns, the two cannot be ‌entirely separated.

Traders interpreted the remarks as a signal of limited tolerance to further rupee weakness.

The South Asian currency had declined over 7% year-to-date before fresh measures over the weekend and has risen 2% this week.

Rupee swap markets are currently pricing in ‌nearly 100 bps of rate hikes over the next 12 months.

Indian ​importers continue to lock in future dollar purchase rates to protect against the rupee ⁠weakening, despite the banks charging more following the central bank's ⁠steps.

Investors await US consumer inflation data, due later in the day, for cues on ‌the future path of interest rates in the world's largest economy. The dollar index was last ​at 102.2.

Published on October 14, 2026

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