The rupee was quoted at 96.3325 per U.S. dollar at 11:15 a.m. IST, having settled at 96.3450 on Monday. The currency had opened marginally weaker, slipping to 96.3850, just one tick short of its all-time low of 96.3875 hit in the previous session.
A large state-run bank, along with other public sector lenders, was seen offering dollars in USD/INR, which some traders took as an indication of likely central bank intervention.
The Reserve Bank of India has been intervening regularly to support the rupee, aiming to keep the pace of depreciation measured without defending any specific level.
“Alongside that, there have been (a) few foreign banks whose name I am hearing on offers,” a currency trader said.
The rupee has consistently required support from the central bank against pressure to weaken against the dollar, driven by limited hedging interest from exporters and a continuing mismatch in daily flows that underscores an imbalance in the market.
India’s merchandise trade deficit expanded to $28.38 billion in April, driven in large part by a jump in crude oil imports to a six-month high. This comes at a time when capital inflows remain subdued and oil prices have shown little sign of moderating since the onset of the Iran conflict in late February.
With Brent crude near $110 a barrel, up 50% since the war began, sustained foreign outflows of more than $20 billion from Indian equities have further intensified pressure on the rupee. The currency is down over 6% in that period.
“When capital leaves in waves, currencies rarely stand still – and the rupee is bearing that full weight,” Amit Pabari, managing director at CR Forex, said.
