Indian Rupee Gains Over 40 Paise After RBI Intervention Despite Budget Borrowing Concerns
The Indian rupee rebounded sharply on Monday, February 2, gaining over 40 paise against the US dollar after a likely intervention by the Reserve Bank of India (RBI) helped stabilise the domestic currency.
The rupee was initially seen opening close to its all-time low of 91.9875 against the greenback. However, central bank support lifted the currency to around 91.77, marking a 0.2% gain from Friday’s closing level, according to a Reuters report. The rupee later strengthened further to 91.55.
The forex market reopened after a two-day holiday weekend, during which the Union Budget for FY27 was presented in Parliament on February 1. The Budget announced a higher-than-expected gross government borrowing of ₹17.2 lakh crore for the financial year 2026–27, up nearly 17% from ₹14.61 lakh crore in the current fiscal year.
Despite the higher borrowing, the government reaffirmed fiscal discipline, pegging the FY27 fiscal deficit at 4.3% of GDP and projecting a decline in the debt-to-GDP ratio to 55.6%. These signals helped reinforce policy credibility and provided reassurance to currency markets.
On Friday, the rupee had slipped to a record low in the final minutes of trading, ending January with a 2.3% monthly loss. Market participants noted that while the Budget did not offer immediate relief for the rupee, it helped ease concerns over long-term fiscal stability.
“For the rupee, the Budget offered reassurance, not relief,” said Amit Pabrai, Managing Director at CR Forex Advisors.
Key Rupee Levels to Watch
Pabrai noted that short-term pressure on the rupee could persist, but the broader outlook remains constructive due to fiscal credibility and growth continuity. He added that India’s real effective exchange rate (REER) still appears undervalued.
With USD/INR trading just below the 92 mark, this level has emerged as a key near-term pivot. A sustained move above 92 could open the door to 92.20–92.50. However, continued RBI support and disciplined fiscal signals may cap sharp depreciation, potentially allowing the rupee to gradually move back toward the 91.00–91.20 range over time.
Ponmudi R, CEO of Enrich Money, said the overall bias for the rupee remains positive despite near-term consolidation.
“While short-term consolidation is visible near the 92.00 level, the broader bias stays positive. The 91.40–92.50 zone acts as a strong support band. A sustained move above 92.00–92.20 could trigger gradual upside extension,” he said, adding that a firm USD/INR trend continues to support MCX bullion prices even during global profit-booking phases.
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