The rupee rebounded Wednesday to close 65 paisa stronger at 90.38 a dollar reversing a five-day streak of free fall, as the central bank likely intervened in the foreign exchange market.
The currency gained 0.7% from its previous close of 91.03 making it the best one-day performance in two months.
“The correction can be attributed to likely intervention by the central bank. This led to a huge movement from 91.07 to 89.98 in a matter of a few minutes in the morning because of thin volumes. After that the currency settled over 90-level,” said KN Dey, a veteran forex market consultant.
The currency closed 91.03 a dollar Tuesday, breaking the 91-level barrier for the first time ever. The all-time low was 91.08 seen Tuesday.
Prior to Wednesday, the rupee depreciated around 2.5% since November 19 while the central bank mostly remained on the sidelines, experts in the forex market said. 
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“India has comfortable forex reserves which gives RBI the power to intervene in the market anytime it thinks needed,” CareEdge Ratings chief economist Rajani Sinha said Wednesday.
At the end of December 5, the forex stockpile of the fourth largest global economy stood at $687.260 billion, covering 11-months of imports.Sinha projected the rupee to move around 89-90 level in FY27. Axis Bank chief economist Neelkanth Mishra on Tuesday said that the currency may touch 92-level by June 2027.
“High volatility is expected to persist in the forex market amid shifting economic and geopolitical headlines. Technically, USD/INR has immediate resistance at 90.60 and support at 89.70,” said Dilip Parmar, an analyst with HDFC Securities.
Axis Bank chief economist Neelkanth Mishra Tuesday attributed the rupee’s fall to speculations rather than changes in fundamentals.
Economists are expecting the balance of payment to remain strong with the current account deficit likely to be restricted to 1.2% of the GDP in FY26. India remained the fastest growing major economies with a trend growth around 7% level.