Rupee hits fresh record low at 91.81 as dollar demand intensifies, RBI intervention absent
PTC Web Desk: The Indian rupee slipped to a new all-time low on Friday, weighed down by strong dollar buying from importers and corporates that erased early gains and added to existing pressure on the currency.
The rupee weakened to 91.81 against the US dollar, breaching its previous record low of 91.74 recorded earlier this week. The currency had opened on a stronger note at 91.43, but sentiment quickly turned as demand for dollars picked up during the session, pushing the rupee down nearly 0.2% for the day.
Market participants said renewed buying by importers through private sector banks to meet near-term payment obligations triggered the slide. A currency dealer at a private bank noted that initial flows at the open were limited, and once those subsided, the dollar-rupee pair came under sustained buying pressure.
So far, traders have not observed any direct intervention by the Reserve Bank of India (RBI) in the spot market. According to a swap dealer at a state-run bank, the central bank remains the key player in the premium market, and in its absence, forward premiums have tended to edge higher.
Meanwhile, RBI’s holdings of US Treasury securities have declined to their lowest level in five years, reflecting a strategic shift aimed at supporting the rupee and diversifying India’s foreign exchange reserves. US Treasury holdings have fallen to around $174 billion, marking a 26% drop from their 2023 peak. These assets now make up about one-third of India’s forex reserves, compared with nearly 40% a year ago.
Analysts say the reduction in US bond holdings is part of RBI’s broader effort to stabilise the rupee, which has come under pressure amid delays in an India–US trade agreement and the imposition of steep tariffs by Washington on Indian exports. The 50% tariff rate is the highest among Asian economies and has added to concerns over trade flows and capital movements.
By trimming its US Treasury exposure, the RBI can deploy the proceeds to buy rupees in the market, thereby providing support to the domestic currency as volatility persists.
- With inputs from agencies
