Indian rupee likely to hold near 90, central bank support cushions weak flows

MUMBAI: The Indian rupee is expected to open little changed on Tuesday, hovering near the 90-per-dollar mark, with expectations of central bank support countering underlying dollar demand.

The 1-month non-deliverable forward indicated the rupee will open largely flat, having settled at 89.9750 on Monday.

The previous session marked a fifth straight decline for the rupee, in which it slipped to an intraday low of 89.9875. After climbing to around 89.25 in the wake of heavy central bank intervention, the currency has been on a weakening path.

The pace of losses has remained measured though, due to expectations of further central bank support. Importers and speculators have stepped back in more aggressively following the currency’s rally from the near-91-per-dollar levels.

“Once those lower levels (on dollar/rupee) were tested, more buying interest naturally resurfaced,” a currency trader said, adding that buying was likely to persist below the 90 level.

He noted that state-run banks were on offer near 90 on Monday, which may have been on behalf of the central bank, though he said it was hard to be certain.

Asian peers offered limited cues for the rupee, with regional currencies largely rangebound in thin trading.

Traders said this was broadly in line with prior years when reduced participation in the final stretch of the year tends to mute directional signals from Asia, leaving the rupee more dependent on domestic flows.

The dollar index was quiet on Tuesday, awaiting the release of the Federal Reserve’s December minutes which are expected to reveal divisions inside the central bank about next year’s policy pathway.

Investors are currently pricing two rate cuts by the Fed in 2026.