The rupee ended at 87.4950 against the U.S. dollar compared with 87.20 in the previous session. The domestic unit fell 1% in February, and slipped to an all-time low of 87.95 during the month.
However, periodic intervention by the Reserve Bank of India (RBI) largely curbed one-way moves on the domestic unit and prevented speculators from betting against the rupee.
The RBI conducted a three-year dollar-rupee buy-sell swap auction on Friday, drawing bids 1.6 times the $10 billion notified amount, following a $5 billion six-month swap in January.
India’s sluggish economic growth, uncertainty over U.S. President Donald Trump’s tariffs and rising possibility of a global trade war have hit foreign investors’ demand for Indian financial assets.
Foreign investors have net sold nearly $3.5 billion of local stocks so far in February, taking the total outflows to about $12.5 billion in 2025. The benchmark BSE Sensex and the broader NSE Nifty 50 fell 5.6% and 5.9%, respectively, during the month. “The outlook continues to favour dollar bulls, supported by sustained demand from importers and continued foreign portfolio investor outflows,” said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
The dollar-rupee pair faces “strong” resistance around 88 levels, Parmar said.
Asian currencies were volatile during the month while the dollar index dropped.
On Thursday, Trump said his proposed 25% tariffs on Mexican and Canadian goods will take effect on March 4 along with an extra 10% duty on Chinese imports.
“We expect a peak protectionism risk premium in FX in the second quarter, which implies a stronger dollar and a weakening of developed European and emerging Asia currencies,” ING Bank said in a note.
