Anna 
The USD continued to strengthen against the Indian rupee, driving the USD/INR exchange rate to fresh levels as market participants reacted to central bank actions and sustained offshore demand pressures.
On Wednesday, the Reserve Bank of India (RBI) concluded a $5-billion USD-INR buy-sell swap facility that drew $10.35 billion in bids, indicating robust market appetite for dollar liquidity. Despite greater interest, the RBI accepted $5.07 billion, just above its initial offering.
RBI officials emphasized that the operation was part of ongoing efforts to support forex market stability amid heightened volatility and demand for USD. The high bid volume reflects persistent demand from importers, exporters, and non-resident holders seeking to hedge against exchange rate risk.
Meanwhile, the Indian rupee continued its decline, crossing the 91 per dollar mark for the first time on Tuesday — a fresh all-time low — driven by sustained portfolio outflows and hedging activity in offshore markets.
The depreciation has been compounded by persistent tension over U.S.–India trade negotiations, which has deterred foreign investment inflows and amplified selling pressure on the rupee. Analysts noted that while India’s export figures showed resilience in November, persistent tariff uncertainty continues to underpin a stronger USD/INR.
Currency traders cited strong dollar demand from corporate hedgers as a core driver of USD/INR moves. “Hedging flows have intensified as firms lock in longer-dated protection against further depreciation,” said a forex market strategist in Mumbai. “The RBI’s operations have helped absorb some pressure, but the underlying trend favors USD strength against the rupee.”
The USD’s global performance also played a role. Across international markets, the greenback remained supported by yield differentials and expectations of divergent monetary policy cycles, even as U.S. economic data introduced fresh uncertainty about future Fed actions.
Looking ahead, analysts expect the USD/INR pair to remain sensitive to further central bank operations and broader risk sentiment. Upcoming U.S. inflation data and new trade negotiations developments could trigger renewed currency volatility.
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