The Indian rupee opened almost flat on February 25, trading at 90.94 per US dollar, barely stronger than the previous close of 90.95. The marginal move underscores a currency market currently dominated less by directional bets and more by policy expectations, particularly regarding intervention by the Reserve Bank of India (RBI).

Currency dealers report that the central bank stepped in during the prior session to defend the psychologically important 91 level a threshold that has increasingly shaped market behaviour in recent weeks. The rupee has moved within a narrow band of roughly 30 paise throughout the month, reflecting a balance between importer demand for dollars and RBI-led supply aimed at preventing sharp depreciation.

According to market participants, both forces have effectively neutralised each other. Importers have used dips to accumulate dollars, while the RBI has reportedly sold dollars to prevent disorderly moves. This push-and-pull dynamic has compressed volatility and discouraged speculative positioning.

The immediate result is a currency that appears stable on the surface but remains vulnerable beneath, as traders largely stay on the sidelines awaiting clearer signals on global risk appetite and domestic policy intent. Analysts widely expect the rupee to continue trading in a tight range unless a decisive external trigger emerges.

Global developments remain a key overhang. Investor sentiment has weakened as markets reassess changes in US trade policy following the US Supreme Court’s rejection of reciprocal tariffs introduced by President Donald Trump. The legal setback has injected uncertainty into the outlook for global trade flows, growth prospects, and currency dynamics.

Despite a modest 0.1 percent decline in the dollar index to around 97.12 overnight, the greenback remains relatively firm. This resilience limits upside for emerging-market currencies, including the rupee, particularly when capital flows remain cautious.

Market attention is now shifting to the US president’s State of the Union address, which could provide clarity on fiscal priorities, trade policy direction, and potential economic stimulus measures. Any signals that strengthen US growth expectations or push Treasury yields higher could revive demand for the dollar and pressure emerging currencies.

Domestically, the RBI’s apparent defence of the 91 level carries broader policy implications. A sharply weaker rupee could complicate inflation management by raising import costs, especially for crude oil and other commodities priced in dollars. Conversely, excessive intervention risks draining foreign exchange reserves or distorting market functioning. The central bank therefore appears to be pursuing a calibrated strategy preventing abrupt depreciation without committing to a fixed exchange rate target.