Rupee Gains Over 2%: 3 Key Reasons Behind the Rise Against the Dollar

The Indian rupee had a stable and positive week in the second week of April, trading in the 92–93 range against the US dollar. In about 10 days, the currency strengthened by more than 2%, after falling past the 95 mark at the end of March. The recovery was mainly supported by RBI actions, easing oil prices and a weaker dollar.

RBI Steps To Reduce Speculative Trading

The Reserve Bank of India introduced new rules to control speculative trading in the currency market, which helped improve sentiment for the rupee. 

On March 27, banks were asked to limit their daily net open rupee positions in the onshore forex market to $100 million by April 10. However, after the rupee slipped past the 95 level on March 31, the RBI tightened the rules further. 

From April 2, banks were restricted from offering certain rupee forward contracts and were not allowed to rebook cancelled forward contracts. These steps helped reduce volatility and the rupee recorded its biggest single-day gain since September 2013.

Ceasefire Optimism And Fall In Oil Prices

A temporary ceasefire announcement between the US and Iran on April 8 led to a sharp drop in oil prices, which fell nearly 13% from the $100 per barrel mark. This supported the rupee because India imports a large amount of crude oil. 

Lower oil prices reduce the country’s import bill, ease pressure on inflation and improve the current account balance. However, the situation remains uncertain as tensions in West Asia continue, keeping the rupee sensitive to oil price movements.

Weaker Dollar Boosts Emerging Currencies

The dollar index has fallen from its recent highs, dropping from around 100 to near 99. When the dollar weakens, emerging market currencies like the rupee become more attractive to global investors. This encourages foreign capital inflows, which supports the domestic currency.

Read More: RBI Will Monitor Forex Markets for Sharp Volatility, Says Governor Sanjay Malhotra! 

Rupee Still Faces Risks From FPI Outflows

Despite the recent recovery, the rupee remains vulnerable to foreign investor outflows. On April 9, foreign investors sold Indian equities worth ₹1,711 crore. In 2026 so far, foreign investors have withdrawn around ₹1.76 lakh crore from Indian markets. Continued geopolitical tensions and oil price volatility could also keep pressure on the currency.

Conclusion

The rupee’s recent recovery was driven by RBI intervention, falling oil prices and a softer dollar. 

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