The Indian rupee has plunged to a historic low, prompting the Reserve Bank of India to intervene in the foreign exchange market to support the weakening currency. Sources indicate that on Wednesday, the central bank sold a modest amount of US dollars in the onshore market. This move came as the rupee's exchange rate fell to an unprecedented low of 96.9650 against the dollar.

The RBI faces mounting pressure to defend the national currency, which has depreciated by more than 7% this year, making it the worst-performing currency in Asia. As a net energy importer, India is grappling with soaring oil prices following the outbreak of conflict, which is widening its trade deficit and raising concerns over the cost of fuel subsidies.

Michael Wan, a senior foreign exchange analyst at MUFG Bank in Singapore, commented, "If the USD/INR pair rapidly approaches the 97 level, the RBI may have to ramp up its intervention. I believe measures are likely being prepared even as we speak."

Capital outflows have further intensified the pressure on the rupee. So far this year, global investors have withdrawn a record $23 billion from the country's stock markets.

Dhiraj Nim, a foreign exchange strategist at ANZ Group, noted that around the 97 to 97.50 level, the central bank is likely to step in with fresh measures, which could include steps to attract external capital.