The Indian rupee opened marginally lower at 90.52 on February 5, 2026, as the market entered a “wait-and-watch” mode. After a volatile week sparked by the historic India-US trade deal, traders are now looking to the Reserve Bank of India (RBI) for direction. While the currency has recovered from its record lows of 92, the road back to sub-90 levels is proving to be a battlefield between exporters and the central bank.
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The Rupee’s Resistance: Holding the 90 Line
The local currency is currently hovering near 90.46, slightly weaker than the previous session’s close of 90.44. In fact, every time the rupee approaches the “psychological 90 level,” the RBI has been spotted buying dollars. This intervention aims to prevent an excessive appreciation that could hurt India’s export competitiveness, especially after the US slashed tariffs to 18%.
Meanwhile, importers are also jumping in to lock in dollars at these relatively “attractive” rates. Consequently, the rupee is stuck in a tight range. “The RBI is essentially building a floor at 90,” noted analysts from Finrex Treasury Advisors. This strategy allows the central bank to rebuild its foreign exchange reserves while providing necessary market liquidity.
RBI’s $25 Billion Liquidity Masterstroke
To manage the sudden influx of sentiment-driven capital, the RBI conducted a massive three-year dollar/rupee buy-sell swap auction on Wednesday. While the notified amount was just $10 billion, the auction drew a staggering 25 billion in bids.
Later, the central bank accepted the higher volume to mop up excess dollar liquidity and shore up its short positions. This move is a clear signal that Governor Sanjay Malhotra’s team is prioritizing stability over rapid appreciation. By deploying these swaps, the RBI ensures that the “Trump Trade” rally doesn’t lead to a chaotic spike in the rupee’s value.
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The MPC Friday: Why a “Pause” is the Base Case
The three-day Monetary Policy Committee (MPC) meeting concludes on Friday, February 6. Most economists predict the repo rate will remain steady at 5.25%. Following a cumulative easing of 125 basis points over the last year, the central bank is likely to maintain a “neutral” stance.
Next, the focus will shift to the RBI’s guidance on liquidity. With the new trade deal potentially bringing in billions in foreign direct investment (FDI), the RBI has more leeway to manage domestic conditions. Still, lingering global uncertainties and sticky bond yields mean a cautious approach is the most probable outcome.
Reality Check: The “Trade Deal Rally” vs. Reality
The official narrative suggests the 18% US tariff deal is an immediate win for the rupee. However, the fine print tells a different story. In fact, the deal is conditional on India pivoting away from discounted Russian oil. Replacing cheap Russian Urals with more expensive US or Venezuelan crude could widen the Current Account Deficit (CAD). Therefore, while sentiment is high, the fundamental “oil bill” could put renewed pressure on the rupee later this year. The “rebound” to 90 may be a temporary sugar high rather than a structural shift.
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The Loopholes: Invisible Walls for the Rupee
Traders should be aware of several “hidden” factors that could disrupt the current stability:
FPI Profit Booking: While foreign portfolio investors (FPIs) are cheering the deal, many are using the rally to exit and book profits on 2025’s IPO gains.
The CPI Base Year Shift: India is moving to a new CPI base year (2024) this month. If this statistical change shows higher-than-expected inflation, the RBI’s “neutral” stance could quickly turn “hawkish.”
Oil Payment Lag: The transition from Russian to US energy contracts involves massive dollar outflows that haven’t fully hit the spot market yet.
What This Means for You
If you are an importer, the current 90.40–90.60 range is an opportunistic window to hedge your future requirements. For those with US-bound exports, the reduced 18% tariff should offset any minor rupee appreciation. Therefore, your focus should remain on volume growth rather than just currency gains.
Next Steps
Wait for the official RBI MPC statement on Friday at 10:00 AM IST for the final word on interest rates and liquidity. You should also monitor the dollar index (DXY) for any unexpected moves that could break the rupee’s current 90.00–91.00 range. Finally, watch for the joint India-US statement to see if the “zero tariff” claims become a legal reality.
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