The rupee begins the week on the defensive, with Friday’s sharp slide continuing to reverberate through currency markets and a broad softness across Asian peers amplifying the pressure. Traders expect the currency to weaken further on Monday, with the 1-month non-deliverable forward market indicating levels beyond 89.50 to the dollar after the rupee closed at a record 89.48 on Friday.
The breach of 88.80—an important threshold the Reserve Bank of India had defended vigorously in recent weeks—has forced the market to reassess the rupee’s near-term range and the central bank’s appetite for intervention. When a key support breaks, “the market spends a few sessions feeling out a new equilibrium”, a trader at a private-sector bank said, adding that choppy moves are likely until traders understand the RBI’s reaction function.
Friday’s decline followed India’s sharply wider October trade deficit of $41.7 billion, alongside weak net financial flows, has left the currency vulnerable. Analysts expect only moderate depreciation for the rest of the fiscal year, arguing that much of the adjustment has already occurred.
But sentiment remains fragile. A bout of portfolio outflows, uncertainty surrounding the India-US trade deal, and the perceived pullback in RBI support have left traders bracing for a test of 90 per dollar in the days ahead. The rupee has now lost 4.5 percent this year, underperforming regional peers despite firm domestic growth indicators and buoyant equity markets.
Asia offered little relief on Monday. Most regional currencies slipped between 0.1 percent and 0.3 percent even as global risk appetite improved modestly. US stocks recovered on Friday and Asian equities opened higher, buoyed by comments from Federal Reserve policymaker John Williams, who signalled that US rates could fall “in the near term”, reinforcing expectations of a 25-basis-point cut next month.
Domestic bond markets will track liquidity movements and upcoming growth data. The benchmark 10-year yield ended last week at 6.5665 percent, with traders expecting a 6.52–6.60 percent range ahead of the RBI’s December 5 policy meeting. Deutsche Bank anticipates a 25-basis-point rate cut and forecasts India’s July–September GDP growth at 7.7 percent.