The rupee rebounded sharply on Thursday, recovering 49 paise from its record closing low to end at 96.36 against the US dollar as easing crude oil prices, signs of moderation in geopolitical tensions and likely intervention by the Reserve Bank of India (RBI) helped stabilise the domestic currency.

The recovery came after the rupee had slipped close to the 97-per-dollar mark earlier this week amid concerns over elevated crude prices, widening external imbalances and sustained foreign fund outflows.

Forex traders, however, said the broader undertone for the currency remains weak. The one-year forward market rate for the rupee touched the psychologically significant 100-per-dollar mark on Wednesday, signalling that markets continue to price in depreciation pressures over the next 12 months.

“This recovery follows a retracement in crude oil prices amid tentative signs of easing geopolitical friction, alongside active central bank intervention,” said Dilip Parmar, research analyst at HDFC Securities.

“Investor focus will now remain on geopolitical developments and the upcoming RBI monetary policy review,” Parmar added.

“Persistent pressure on the rupee took it close to 97, but heavy selling by the RBI brought USD/INR down,” said Dhiraj Nim, foreign-exchange strategist at Australia and New Zealand Banking Group. “This is in line with the RBI’s stance of curbing undue volatility and preventing sharp moves in a short span of time.”

A report by DBS Bank said the rupee has been undergoing a “rapid and dramatic depreciation streak”, falling more than 6 per cent against the dollar in calendar year 2026 while touching successive record lows.

“We have lifted our USD/INR forecasts into a 95-100 range for the rest of 2026,” the report authored by Radhika Rao, senior economist, and Philip Wee, senior FX strategist, said.

Attention is now turning to the RBI’s next monetary policy meeting scheduled for June 5, with speculation rising that the central bank could consider tightening measures to support the currency and contain imported inflation risks.

According to a Bloomberg report, RBI officials, including governor Sanjay Malhotra, have held internal discussions on possible policy responses, including an interest rate increase, additional currency swaps and raising dollar resources from overseas investors.

Economists at Standard Chartered said a rate hike could come as early as June in response to rising inflation risks from higher crude prices and elevated global bond yields.

Former RBI governor Duvvuri Subbarao said policymakers must focus not only on technical measures but also on maintaining market confidence.

“When it comes to battling an exchange rate crisis, a failed defence is worse than no defence,” Subbarao wrote in a newspaper, cautioning that markets could turn more volatile if investors begin to doubt the RBI’s resolve or firepower.