The Indian rupee strengthened modestly in early trade on February 26, supported by a softer US dollar and indications of central bank intervention aimed at preventing further depreciation. The currency appreciated by 11 paise to trade near 90.84 per dollar, recovering from the previous close around 90.95, even as broader uncertainty in global trade policy continues to cloud directional cues.

The move comes after weeks of range-bound trading, reflecting a delicate balance between external pressures particularly high crude oil prices and dollar strength and domestic policy actions designed to maintain currency stability. Market participants indicated that the Reserve Bank of India likely intervened through dollar sales in both spot and forward markets to prevent the rupee from breaching the psychologically important 91-per-dollar mark.

Such intervention, while not officially confirmed, is consistent with the RBI’s long-standing approach of smoothing excessive volatility rather than targeting a fixed exchange rate. By supplying dollars into the market near critical levels, the central bank appears to be signaling its discomfort with a sharp depreciation that could import inflation and destabilize capital flows.

At the same time, demand for dollars from importers particularly oil marketing companies remains elevated. Brent crude prices staying above $70 per barrel increase India’s import bill and typically exert downward pressure on the rupee. Importers often accumulate dollars in advance during periods of uncertainty, amplifying demand-side stress on the domestic currency.

Adding to the complexity is the evolving global trade landscape. The United States has indicated that tariff rates for certain trading partners could rise to 15 percent from 10 percent, though no specific countries were named. This announcement follows a legal setback to earlier tariff measures, creating ambiguity about the future direction of US trade policy. Such uncertainty tends to strengthen the dollar in risk-off phases but can also trigger volatility across emerging-market currencies.

On the day, however, the dollar index which tracks the greenback against a basket of major currencies slipped to around 97.55, easing by roughly 0.2 percent. This pullback provided breathing room for the rupee and other emerging-market currencies. Analysts noted that a mild improvement in global risk sentiment also contributed to the local currency’s gains.

According to market commentary, the rupee’s inability to cross the 91 threshold despite persistent pressures suggests active management rather than organic strength. A controlled exchange rate path helps anchor inflation expectations and protects foreign investment sentiment, especially when global capital flows remain fragile.