The Indian rupee plunged to a fresh all-time low today, as dollar demand from corporates and importers outweighed early moves and compounded existing pressure on the currency.
The rupee slipped to 91.81, slipping past the previous record low of 91.74 hit on Wednesday, falling about 0.2% on the day. The currency had started the day stronger at 91.43 before the slide resumed.
The rupee came under renewed pressure after importers bought dollars through private sector banks to meet immediate obligations, bankers said. “It looks like the opening flow was limited; once it passed, USD/INR was back to being bid,” a currency trader at a private sector bank told Reuters.
Until now, no intervention by the Reserve Bank of India has been spotted.
“The RBI is pretty much the only meaningful receiver in premiums,” a swap trader at a state-run bank said. “When they’re not around, the premiums naturally drift higher.”
RBI's Money Management
Meanwhile, the RBI's holdings of US Treasury bonds have fallen to a five-year low as India pushes to support rupee versus the US dollar and diversify its forex reserves. They have dropped to $174 billion, down 26% from a 2023 peak and accounting for one-third of India's forex reserves compared with 40% a year prior.
Part of the calculus stems from RBI’s efforts to defend India’s battered rupee. The local currency has fallen to record lows on delays to an India-US trade deal after Washington’s 50% tariffs on Indian exports—the steepest in Asia.
{{/usCountry}}Part of the calculus stems from RBI’s efforts to defend India’s battered rupee. The local currency has fallen to record lows on delays to an India-US trade deal after Washington’s 50% tariffs on Indian exports—the steepest in Asia.
{{/usCountry}}By selling US Treasury holdings, RBI can then use the funding to purchase rupees to strengthen its value.