The rupee fell to an all-time low on Thursday, breaching the psychologically important 92-per-dollar level as persistent foreign capital outflows and strong dollar demand from importers weighed heavily on the currency.
In early trade, the rupee slipped past its previous record low of 91.9650 touched last week, extending its downward streak despite India’s relatively strong domestic economic fundamentals.
The rupee has weakened about 2 percent so far this year and nearly 5 percent since the US imposed steep tariffs on India’s merchandise exports. This has triggered heightened anxiety among importers and corporates, who have stepped up hedging activity to protect themselves against further depreciation.
At the same time, exporters have slowed dollar sales in the forward market, reducing supply and intensifying pressure on the currency, traders said.
Market participants said the Reserve Bank of India likely intervened before the spot market opened on Thursday to slow the rupee’s fall as it approached the 92 level. The central bank has consistently maintained that it does not target any specific exchange rate and intervenes only to curb excessive volatility.
The speed of the decline has also unsettled markets. The rupee has slid close to 92 after breaking past the 91 level for the first time just six trading sessions ago.
Steep US tariffs, sustained foreign portfolio investor outflows, rising bullion imports and growing corporate concern over currency stability have kept the rupee under pressure, even as India remains the world’s fastest-growing major economy and has recently concluded a free trade agreement with the European Union.
Since the US tariffs came into effect, the rupee has weakened around 7.5 percent against both the euro and the Chinese yuan. On a trade-weighted basis, India’s real effective exchange rate stood at 95.3 in December, its lowest level in a decade, according to central bank data.