The Indian rupee extended its recovery for a second consecutive session on Friday, 22 May, appreciating 63 paise to close provisionally at 95.73 against the US dollar. The domestic currency drew support from easing crude oil prices, a positive domestic equity market, and expectations of continued Reserve Bank of India (RBI) intervention to curb excessive volatility.

How the Session Unfolded

The rupee opened at 96.30 per dollar in the interbank foreign exchange market before staging sharp intra-day gains. It touched a high of 95.30 and a low of 95.68 before settling at 95.73. This follows Thursday's rebound of 50 paise from a record closing low, when the currency had ended at 96.36 against the greenback.

What Drove the Recovery

'This recovery is largely attributed to the Reserve Bank of India's active intervention following its USD/INR buy-sell swap announcement, along with easing geopolitical tensions that have softened imported commodity prices,' an analyst said.

Forex market participants noted that investor sentiment improved after comments from US Secretary of State Marco Rubio suggested that diplomatic efforts related to the Iran situation were progressing constructively. Those remarks helped ease concerns over potential disruptions in global energy markets, offering relief to emerging-market currencies including the rupee.

The domestic unit also benefited from a decline in US Treasury yields and strength in Indian equities. The Sensex rose 231.99 points to close at 75,415.35, while the Nifty advanced 64.60 points to settle at 23,719.30.

Key Risks Ahead

Market analysts cautioned that geopolitical developments remain a key risk for the currency. 'For now, the near-term trend has turned supportive for the rupee, with RBI intervention continuing to play a key role in controlling volatility and restoring confidence in the forex market,' one analyst noted. The rupee's near-term range is expected between 95.00 and 95.90, according to analyst estimates.

Broader Context

The two-day recovery comes after the rupee had hit a record closing low, underscoring the fragility of the currency amid persistent global headwinds. The RBI's USD/INR buy-sell swap mechanism has emerged as a key stabilising tool, and its continued deployment signals the central bank's intent to prevent disorderly depreciation. With crude oil prices softening and geopolitical risk partially receding, the rupee's near-term outlook has stabilised — though a fresh escalation in global tensions could quickly reverse gains.