Rupee appreciated sharply, after RBI intervened in the currency markets reversing the rupee's recent slide from record lows near 91.07 levels, amid ongoing pressures from FII outflows and trade imbalances. However, momentum indicators remain bearish but not oversold, indicating limited scope for sharp rupee appreciation unless triggered by a meaningful shift in global cues. Such triggers could include a sharp pullback in US yields or softer-than-expected guidance from the Fed. In the absence of these factors, volatility is expected to stay contained, with the RBI continuing to actively smoothen excessive moves. Forward premiums and onshore liquidity conditions will remain important variables to monitor in the near term.

A continuation of the RBI’s calibrated intervention strategy could keep USDINR broadly range-bound, although risks remain skewed to the upside due to sustained FII outflows, elevated crude prices, and lingering global policy uncertainty.

Overall, while structural pressures continue to cap a meaningful rupee recovery, proactive RBI intervention, stable domestic macro fundamentals, and a measured policy approach are expected to prevent any disorderly depreciation in the near term, keeping the currency anchored around current levels.