The Indian rupee slipped on Thursday, reversing earlier gains despite active intervention by the Reserve Bank of India (RBI), as global tariff concerns and capital outflows weighed heavily on the currency. Analysts say that while RBI efforts temporarily supported the rupee, underlying external pressures have continued to challenge its stability.

Rupee Movement and RBI Intervention

The rupee opened at ₹89.95 against the U.S. dollar and briefly strengthened to ₹89.75 following RBI intervention for the second consecutive day, according to bankers. However, the currency eventually settled at ₹90.0175, down from Wednesday’s close of ₹89.88.

A foreign bank trader commented, “Market moves have again started to be dominated by one large player, and the currency changes direction based on the presence or absence of RBI,” highlighting the central bank’s continued influence on the rupee.

Despite the RBI’s efforts, market participants remain cautious, noting that the recovery from Tuesday’s low of ₹90.30 may not be sustainable.

Impact of U.S. Tariffs and Equity Outflows

The Indian rupee has come under pressure due to multiple external factors, particularly tariff concerns from the United States. Anil Bhansali, head of treasury at Finrex Treasury Advisors, explained, “The combined effect of 500% tariffs proposed by the U.S., fall in equity markets, and RBI short forward positions kept the pressure on the rupee consistently, even though RBI intervened intermittently to sell dollars.”

Further compounding the pressure, equity markets tumbled for the fourth consecutive day, with the Nifty 50 Index falling 1% amid foreign capital outflows. Investors were particularly wary of export-oriented firms due to growing U.S. trade tensions.

Forward Market Activity

The rupee’s forward premiums have surged as importers actively hedged against currency fluctuations. “The rupee premiums again have started to move up as importers bought and paid for forward positions of their import holdings,” Bhansali added. This trend indicates heightened demand for dollar hedging in anticipation of further volatility.

Geopolitical Developments Adding Pressure

The rupee’s movement is also influenced by global geopolitics. U.S. President Donald Trump recently signaled that a bipartisan sanctions bill targeting countries doing business with Russia could proceed in Congress, potentially affecting global trade flows and adding to market uncertainty.

Market Focus on Upcoming U.S. Data

Investors are now closely watching the upcoming U.S. non-farm payrolls (NFP) report, scheduled after Indian market hours on Friday. The report is expected to provide insights into the U.S. labor market and shape the Federal Reserve’s monetary policy for 2026, factors that can indirectly impact the Indian rupee and foreign investment flows.

Outlook for the Rupee

With continued foreign capital outflows, growing tariff concerns, and geopolitical uncertainties, the Indian rupee may face sustained volatility in the near term. Analysts advise importers and investors to hedge their currency exposure and monitor global trade developments closely.