The Indian rupee strengthened by 32 paise to 94.85 against the US dollar in early trade on Thursday, extending its recent gains as Reserve Bank of India (RBI) measures to manage the foreign exchange market and a weaker US dollar supported the domestic currency.

The rupee opened at 94.91 against the US dollar before gaining further during early trading.

The domestic currency has benefited from the RBI’s interventions in the foreign exchange market, measures to tighten liquidity and traders unwinding their long-dollar positions.

Earlier in October, the RBI tightened rules governing foreign exchange derivatives trades to curb speculative bets against the rupee. It also directed banks to maintain a 20 per cent reserve against dollar purchases exceeding $2 million.

In another move targeting the derivatives market, the RBI instructed authorised dealers not to allow users to rebook any cancelled foreign exchange derivative contract involving the Indian rupee, whether deliverable or non-deliverable.

The rupee had closed 19 paise higher at 95.16 against the dollar in the previous trading session.

Market experts said the domestic currency had moved decisively beyond its recent trading range of 95.00-95.50. They identified 94.80 as the next key level and noted that a sustained move below this mark could pave the way for further appreciation.

Lower direct dollar demand from oil marketing companies and improving market sentiment could provide additional support to the rupee.

Favourable global market conditions also strengthened the domestic currency.

Currency analysts expect the rupee to trade within the 95.60-97.50 range against the dollar by the end of 2026, with most forecasts clustering around the 96-97 level.

Meanwhile, the dollar index, which measures the US currency against a basket of major currencies, declined to 101.99.

Brent crude, the international oil benchmark, also fell nearly 2 per cent to $104.30 per barrel, easing some pressure on India’s import bill.

Domestic equity markets traded higher alongside the rupee’s gains. The Sensex rose more than 1,000 points, or 1.45 per cent, to 73,836.71, while the Nifty gained 300 points, or 1.36 per cent, to 22,929.55.