The Indian rupee weakened to a fresh record low on Monday despite apparent intervention by the Reserve Bank of India (RBI), underscoring persistent pressure from a strong U.S. dollar and adverse global financial conditions.
The rupee fell as far as 90.56 per dollar, its weakest level on record, before paring some losses to trade around 90.52, down about 0.1% on the day. Traders said the RBI was likely active in the market, selling U.S. dollars to smooth volatility and cap losses, though the intervention did little to reverse the broader trend.
Market participants said dollar demand remained strong amid firm U.S. yields and continued global risk aversion, which have weighed on emerging-market currencies more broadly. While the RBI has consistently acted to limit excessive rupee volatility rather than defend any specific level, the latest move highlights the challenges facing policymakers as external pressures intensify.
The rupee’s weakness also reflects structural factors, including India’s persistent current-account sensitivity to higher energy prices and capital flow volatility. Importer demand for dollars has remained steady, while foreign portfolio inflows have been uneven amid shifting expectations around U.S. monetary policy.
RBI intervention has helped slow the pace of depreciation, but traders noted that the central bank appears comfortable allowing a gradual adjustment in the exchange rate, provided moves remain orderly. India’s foreign exchange reserves remain substantial, giving the RBI scope to lean against sharp or disorderly moves, though authorities have signalled a preference for conserving reserves rather than mounting an aggressive defence.
Looking ahead, currency strategists say the rupee is likely to remain under pressure as long as the dollar stays supported by higher-for-longer U.S. interest rates and global financial conditions remain tight. Near-term direction will depend on upcoming U.S. data, global risk sentiment and the RBI’s tolerance for further depreciation toward psychologically important levels.
