Rupee recovers from record low to end flat after likely RBI intervention

The Indian rupee recovered from its record low to end unchanged on Monday, helped by likely intervention from the Reserve Bank of India towards the later part of the session, according to traders.

The rupee ended at 88.1950 to the U.S. dollar, identical to Friday’s close. The currency fell 0.7% in August, its fourth consecutive monthly decline.

The rupee plummeted to a fresh record low of 88.33 earlier in the day, reflecting mounting concerns over higher U.S. tariffs on Indian goods and the broader economic implications for the South Asian country.

“Today being a U.S. holiday there was thin liquidity, thus flows had power to create unusual moves in the currency,” said Kunal Sodhani, vice president at Shinhan Bank India.

“Overall, rupee weakness may persist in order to maintain export competitiveness. For USD/INR, 87.94 now acts as an important support, which was earlier the all-time high, while 88.50 levels may be tested.”

The unit is the worst-performing Asian currency year-to-date, down about 3% against the dollar, and the underperformance is expected to continue as Indian goods face the highest U.S. tariffs among Asian countries. Higher tariffs are likely to drag the nation’s export competitiveness, and a slowdown in exports could weigh on corporate revenues and profits. India’s trade balance and broader growth outlook could also be affected, forcing foreign portfolio investors to reconsider allocations to Indian equities.

Foreign investors have pulled out $2.4 billion from Indian equities over the past three sessions, and continuous outflows are expected to exacerbate volatility in the currency and equity markets.