Rupee strengthens 2% in three days to 94.75 against US dollar; key factors impacting the domestic currency

Indian rupee strengthened its value by 2% against the benchmark US dollar in the last three trading sessions as of Wednesday, October 14, as currency market traders focused on the Reserve Bank of India’s spot market pressure-easing move and a pullback in spot demand for the greenback.

TradingView data showed that the Indian rupee rate gained 2% in the past three days to 94.75 per US dollar as of Wednesday’s trading session, in comparison to 96.77 per US dollar levels, due to the latest measures supporting the domestic currency.

As of 1:55 pm (IST), the USD/INR pair was trading 0.22% lower at 95.07 per US dollar, indicating strength in the domestic currency, when compared to the previous market close levels of 95.28 per US dollar.

This comes against the backdrop of the Reserve Bank of India (RBI) launching a ‘special window’ for public sector oil marketing companies to purchase US dollars directly from the central bank instead of relying on and adding pressure on INR in the spot market.

Experts predict that RBI’s latest moves, along with its monetary policy stance, is expected to support the Indian rupee in the near term despite the geopolitical pressure on the currency markets.

How have rupee rates performed?

Data collected from TradingView showed that despite the recent appreciation in the Indian rupee rates, the domestic currency has lost a significant portion of its value this year due to the elevated demand for US dollars and the heightened risk sentiment in the global markets.

Investors are likely to pull funds out of emerging market bets and shift their investments into safer assets like US Treasury bonds and the US dollar due to the elevated risk sentiment powering the demand for the same.

This move adds to volatility, and in the case of the Indian rupee, it results in traders selling the domestic currency, increasing the overall weakness in the market.

On a year-to-date basis in 2026, the Indian currency has lost 5.7% of its value as of October 14, while declining 2.2% against the US dollar in the last six months, as per the exchange data.

This week’s rally resulted in the USD/INR pair reversing its trend, accounting for the appreciating Indian rupee at a time when global dollar demand is witnessing a marginal pullback but remains at an elevated level.

The US dollar spot index was trading around 102.22 levels on Wednesday’s market.

What was RBI’s support for INR?

Last weekend, RBI announced that PSU oil refining companies will be able to purchase US dollars directly from the central bank, effective from Monday, October 12, lifting off the pressure on the Indian currency in the spot market.

The oil companies have huge import bills of crude oil which have to be paid in dollar terms, and with the elevated oil prices in the global market, these firms would have had to purchase the greenback at a much higher rate, further driving down the Indian rupee.

With this latest move, the companies can now purchase US dollars directly from the RBI instead of relying on the spot market. RBI holds $604 million in foreign currency assets, which include US dollars, as part of its forex reserves as of the week ended October 2, 2026.

Apart from this move, RBI’s update on conducting an open-market sale of ₹25,000 crore of government bonds and the daily cash reserve ratio (CRR) mandate increase aims to reduce liquidity in the system amid inflationary pressures in the Indian economy.

An increased daily CRR limit, effective from October 16, will potentially prevent excess speculative trading of the domestic currency due to the increased cost of rupee funding in the market.

Other key factors like investment flows, crude oil prices and the interest rate trajectory will be the key momentum drivers of the Indian rupee in the upcoming period.