The Indian rupee gained 0.4% against the U.S. dollar on Monday after the Reserve Bank of India (RBI) stepped in to stabilise the currency. The rupee was trading at 89.15 per dollar, compared with Friday’s close of 89.48. According to four traders cited by Reuters, the RBI likely intervened in the market before trading began, helping the currency recover from the record low hit late last week. They added that the central bank appeared active in both the spot market and the non-deliverable forwards market.
Concerns remain that, without continued RBI support, the rupee could slide further. Ritesh Bhansali of Mecklai Financial Services told Bloomberg that the currency could “easily” breach 90 per dollar in the absence of intervention, noting offshore market levels. He expects the RBI to defend the 90–90.50 range to prevent a disorderly fall that could encourage speculative activity.
The rupee has already weakened 4.5% this year, making it one of Asia’s poorest-performing currencies. Further depreciation could intensify equity outflows and raise inflation risks, especially given India’s dependence on imported fuel. Pressure on the currency has increased as India’s trade deficit hit a record high in October, with exports to the U.S. falling for the second consecutive month due to newly imposed 50% tariffs.
Yes Bank economists wrote that a wider-than-expected trade deficit and subdued financial inflows have added to the rupee’s weakness, although RBI intervention has limited excessive volatility. With the currency entering uncharted territory, they cautioned that forecasting precise levels is difficult but expect the rupee to remain capped near 90 per dollar.
Data released Friday showed that RBI’s recent interventions have reduced foreign exchange reserves by roughly $10 billion since mid-September.
