The RBI has stayed on the sidelines, with no visible intervention to support the currency
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PRAKASH SINGH
The rupee hit an all-time low on Thursday, weighed down by demand for dollars from oil and defence companies for import payments, even as concerns over the US’s steep tariffs on Indian exports continue to rile market sentiments.
The currency plunged to close at a record low of 88.4425 per US Dollar against previous close of 88.10, with the RBI reportedly not intervening in the market. It hit a record low of 88.36 last Friday.
Amit Pabari, MD, CR Forex Advisors, observed that the rupee slipped to a fresh all-time low against the dollar, marking a continuation of its steady decline amid persistent external pressures.
Notably, this time, it seems the RBI has stayed on the sidelines, with no visible intervention to support the currency, he added.
Rupee underperforms despite weaker US dollar
Pabari noted that despite the US dollar weakening nearly 9.5 per cent this year, boosting most Asian currencies, the rupee has underperformed. Since January, it has depreciated 3.37 per cent against the dollar and 4.57 per cent since April, making it the weakest currency in the region.
In contrast, the Taiwan dollar and Thai baht have gained 7.48 per cent and 7.38 per cent, respectively, underscoring the divergence in Asian currency performance.
Against this backdrop, Pabari expects USD/INR to trade in a near-term range of 87.90-88.60. While tariff pressures continue to weigh on sentiment, the dollar’s gradual weakness and expectations of a potential Fed rate cut provide some scope for the currency to find near-term support, he added.
Equity outflows, trade deficit add to depreciation pressure
Dipti Chitale, CEO, Mecklai Financial Services, said the rupee’s fall against the US dollar comes on the back of persistent equity outflows, amplified US tariff pressure on Indian exports, and a wider trade deficit fuelled by gold, crude and commodity imports.
A firm US dollar, supported by elevated yields and Fed uncertainty, has added to the pressure on Emerging Market currencies, including the rupee, she added.
“After active intervention in August, the RBI has stepped back, allowing more market-driven moves. Recent action has been limited to smoothing sharp volatility rather than defending specific levels, keeping the currency more exposed. The near-term risks are from trade tensions, capital outflows and weak exports. Unless the RBI re-engages or FII inflows materialise (in bond market), the rupee may continue to be weaker, with some estimates placing it around 88.8–89.0 by year-end,” opined Chitale.
She observed that the rupee’s slide reflects both global and domestic headwinds, and with the RBI currently in a hands-off mode, further pressure cannot be ruled out.
Currency outlook fragile amid domestic and global headwinds
IFA Global, in a note, said that while the RBI has been intervening through state-run banks to smooth volatility, it is not defending a specific level, leaving the currency outlook fragile.
The rupee remains caught between domestic trade and capital pressures and global Dollar moves shaped by US inflation and Fed policy, it added.IFA Global, in a report, said
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Published on September 11, 2025
