Indian rupee struggles close to all-time lows as dollar gains strength

There are persistent dollar bids from importers and foreign banks so the direction of travel for the rupee appears to be lower

A shopkeeper counts Indian currency coins at his shop, in the old quarters of Delhi, India. Photo: Reuters

The Indian rupee hovered near its record low on Wednesday, staying flat, as worries about the impact of steep U.S. tariffs and shifts in visa policies kept up the pressure, with intervention by the Reserve Bank of India offering some support.

The rupee was last nearly flat at 88.7425 against the U.S. dollar, but is in touching distance of its all-time low of 88.7975 hit on Monday. While the local currency appeared on course to open weaker around 88.85, likely intervention by the central bank in the non-deliverable forwards and onshore spot market helped it find its footing, traders said.

There are persistent dollar bids from importers and foreign banks so the direction of travel for the rupee appears to be lower, a trader at a state-run bank said, adding that the extent will depend on what RBI allows.

India’s benchmark equity indexes, BSE Sensex, opens new tab and Nifty 50, opens new tab were down about 0.4% each on the day. A gauge of IT stocks, opens new tab was down nearly 1%, as investors fretted over how a steep rise in fees for US H1-B visas could impact their business models.

Foreign investors have sold $1 billion worth of Indian stocks on a net basis so far in September, taking the year-to-date outflow tally to nearly $16 billion.

The central bank had likely intervened in the market on Monday as well to support the rupee, according to traders.

On the day, modest strength in the dollar was a pain point for the rupee. Asian currencies were down slightly.

“Despite brief dips in the dollar’s strength, persistent market pressures have kept the local currency under strain, reflecting a challenging mix of global developments,” said Amit Pabari, managing director at FX advisory firm CR Forex.