We can attribute the following reasons for this.
1) RBI now holds nearly 525 Billion USD in Fx reserves. There average buy have been revalued at 75.50 on 30th June 2020. Every one rupee appreciation results in an MTM or translation loss of 525 Billion INR. This theory holds but may not be very strong reason to believe, as this is something novel, that we ponder about.
2) There are lot of FX inflows/investments expected on account of big stake sales. There may be an influence on USD INR cause of this. It is the same gig giant corporate which held back entire stock Market 10 years back, at the time of a power company. We can’t under estimate their strength and standing.
3) The Yuan still holds at around 7. It hasn’t been impacted at all due to Euro movement, majorly cause PBOC controls it and they do not find any merit in Euro strength. If rupee is allowed to appreciate, the already, virus battered Export community in India will lose its export competitiveness and suffer losses.
4) Appreciated levels in USD INR will not help imports this year. Import of Gold and Crude are on a decline on a monthly basis. Last quarter we had seen an export surplus, first time since Jan 2020. The trend is like to continue in quarters that follow.
Note: A change in the circumstances as mentioned in Point 2 and 3, may force RBI to let loose rupee. Rupee may then appreciate significantly.