INR tests 91 but steadies as suspected RBI selling checks holiday-thinned, NDF-led pressure.

Summary:

• INR last: 90.9450 on the interbank matching system after briefly slipping past 91.

• Traders said the Reserve Bank of India likely sold U.S. dollars before the local spot open to prevent a cleaner break above 91/$.

• Offshore 1-month NDF had pointed to an open around 91.02–91.06, versus 90.6675 prior close, before the onshore market steadied.

• Thursday’s move was exacerbated by thin liquidity due to a Mumbai market holiday (Feb 19).

• Reuters notes strong dollar-buying appetite in NDF weighed on INR on Thursday; traders also flagged a major public sector bank on the bid.

• Broader backdrop: firm USD, higher oil, softer risk tone and ongoing focus on geopolitics—factors that typically pressure INR.

The Indian rupee opened Friday on the back foot but recovered modestly after traders said the Reserve Bank of India likely sold U.S. dollars ahead of the local spot market open, an intervention seen as aimed at preventing a sustained break beyond the psychologically important 91-per-dollar level.

In early pricing, the rupee was last indicated around 90.9450, after having slipped past 91 in the prior session. Traders said the currency had initially looked set to open weaker near 91.05–91.08, before stabilising closer to 90.95 as suspected RBI dollar supply appeared. Reuters separately noted the offshore 1-month NDF had implied an opening range around 91.02–91.06, compared with 90.6675 at the previous close.

Thursday’s rupee weakness was amplified by thin liquidity because Mumbai, India’s main FX trading hub, was shut for a local holiday on Feb 19, leaving price discovery more exposed to offshore flows. Traders highlighted strong dollar-buying appetite in the NDF market as a key driver pushing INR through 91 in otherwise light conditions.

–

Why INR has been a little weak

Even outside holiday distortions, INR has been contending with a mix of familiar headwinds:

• Global USD support: A firmer dollar tone and cautious Fed messaging can reinforce demand for dollars versus EM FX. Reuters flagged the dollar’s strong weekly performance as a weight on INR.

• Oil sensitivity: India’s status as a major crude importer makes INR vulnerable when oil rises; Reuters noted firmer oil as part of the pressure mix.

• Hedging and importer demand: Routine importer hedging and episodic corporate dollar bids tend to show up quickly when USD/INR approaches round-number levels like 91.

• Event risk/geopolitics: Renewed Middle East tensions (including U.S.–Iran risks) can lift the dollar and oil simultaneously, an uncomfortable combination for INR.

–

What to watch next

Market focus remains on whether the RBI continues to lean against a move beyond 91. Reuters has previously reported traders seeing RBI presence around the 90.70–90.80 area, suggesting officials are sensitive to the pace and optics of depreciation rather than defending a single fixed level.

If offshore NDF demand remains heavy and oil stays firm, USD/INR may continue to probe the topside, though suspected RBI supply could keep the move orderly.