Rupee Slumps to All-Time Low as Dollar Demand Surges
Rupee Slumps to All-Time Low as Dollar Demand Surges
Rupee dives to a fresh record low against the dollar amid risk-off markets and strong dollar demand from imports, with traders eyeing India-US trade talks.
The rupee closed at 90.74 per dollar, slipping to an intraday low of 90.80 in a session that underscored continued weakness and left the currency as Asia’s worst performer. Forex traders cited a risk-off market mood and persistent dollar demand from importers as key drags on sentiment, even as a better trade balance offered limited relief. At the interbank market’s open, the rupee stood at 90.53 per dollar, only to retreat steadily and settle at the provisional 90.74 level after hitting a record intra-day low of 90.80. The previous close was at 90.99, showing a substantial pressure that extended into the week. Analysts noted that the rupee’s weakness comes despite some macro positives, underscoring a deeper demand-supply imbalance in the currency market. On Friday, the rupee had ended at 90.49 per dollar, marking another all-time low and highlighting the broader trend of depreciation.
Analysts warned that the near-term bias remains skewed in favor of the US dollar, with resistance for the USD/INR pair pegged around 90.95 and support around 90.50. The ongoing outflows of foreign funds, coupled with robust dollar demand from importers, are seen as the main culprits behind the rupee’s slide, even as the market awaits cues from policy signals and external developments. The currency’s slide has drawn attention to the potential impact on inflation and import costs, as broader macro data continues to paint a mixed picture of demand and growth.
In a separate development, officials said India and the United States are “very close” on a framework deal, though no specific timeline was given. Market participants will be watching these talks closely, given their potential to influence risk sentiment and the rupee’s trajectory in the weeks ahead. Despite the softer tone in macro indicators, the rupee’s ongoing depreciation underscores the challenge of balancing domestic fundamentals with external factors in a global dollar environment. Traders caution that volatility could persist as investors weigh the implications of policy signaling against the backdrop of external drivers and ongoing trade negotiations.
Looking ahead, the currency market is likely to remain sensitive to dollar strength, import demand, and headlines from India-US discussions. While some economies might benefit from a weaker rupee via exports, higher import costs could weigh on inflation and consumer prices if the trend continues, keeping policymakers and traders vigilant about the path forward.
Cover image source: Rupee falls to all-time low against U.S. dollar in early trade 🔗
