Indian rupee pinned near record low, likely RBI intervention cushions fall

MUMBAI: The Indian rupee hovered near its record low on Monday, with likely central bank intervention helping limit the currency’s decline amid sustained importer hedging and a broadly stronger dollar.

The rupee was last at 88.7875 against the U.S. dollar, as of 10:00 a.m. IST, little changed on the day and just shy of its all-time low of 88.80 hit in late-September.

Traders pointed to dollar sales from state-run banks, most likely on behalf of the Reserve Bank of India, which helped the local unit avoid deeper losses.

At these levels, it has become very hard to gauge the direction given the risk of intervention and a broader bias towards further depreciation, a trader at a Mumbai-based bank said.

The rupee has faced persistent headwinds since steep U.S. tariffs on Indian exports took effect in late August.

A hawkish tilt in the U.S. Federal Reserve’s policy outlook last week also weighed on the rupee alongside dollar demand spurred by the maturity of positions in the non-deliverable forwards market.

“In the near term, the rupee may continue to trade under mild pressure, moving within a range of 88.50–89.10 as global dollar strength persists and markets await concrete progress on the India-U.S. trade deal,” said Amit Pabari, managing director at FX advisory firm CR Forex.

The dollar index was perched near a three-month high, while Asian currencies were flat-to-modestly weaker.

Remarks from a host of Fed policymakers will be in focus this week to gauge the future trajectory of benchmark rates in the United States.

Money markets are currently pricing in a near 70% chance of a rate cut in December, down from over 90% a week earlier, per CME’s FedWatch tool.