Rupee Extends Intervention-Spurred Rise as Merchant Flows Take Center Stage
Hot take: The rupee’s latest gains look less like a one-off policy stunt and more like a carefully choreographed squeeze play — Reserve Bank support nudged the currency higher, but it’s merchant and trade-related flows doing the heavy lifting behind the scenes. Market chatter says the central bank’s interventions provided a runway; exporters, importers and invoicing-season flows are now running the show and determining whether the move sticks.
Context: After targeted intervention helped arrest earlier weakness, intraday and multi-day data show USD/INR drifting lower as exporters repatriate receipts and importers time purchases, amplifying demand-supply swings in the spot market. Liquidity conditions, FX forward curves and near-term macro news will shape the next leg: sustained appreciation would require continued merchant-aligned flows and benign external pressures, while renewed dollar strength or a decline in merchant supply could test the rupee again.
