Indian rupee hits record low, RBI intervention averts fall past 92

MUMBAI: The Indian rupee hit a record low against the dollar on Thursday, pressured by dollar demand linked to the maturity of non-deliverable forward positions and corporate hedging, while the central bank likely intervened to hold it above the psychologically significant 92 level.

The Indian rupee ended the session at 91.9550 per dollar, down 0.2% from its previous close. Earlier in the session, it fell to 91.9850.

Weakness in the currency also spilled over to Indian government bonds, reinforcing a dilemma for the market wherein the Reserve Bank of India’s efforts to shore up banking system liquidity get blunted by its FX market interventions.

The central bank intervened on Thursday as well to cap the Indian rupee’s fall, traders said.

Expectations of the Indian rupee depreciating further are also compounding the strain on India’s interest rate swaps market, which has contributed to pushing up overnight index swap rates to levels that price in monetary tightening, even though macro-economic indicators signal no need for it.

The Indian rupee’s weakness also stands in contrast with India’s strong economic growth numbers.

The economy is expected to grow between 6.8%-7.2% in the fiscal year starting April, a modest slowdown from the 7.4% projection for the ongoing fiscal, the government’s annual economic survey said.

“The Indian rupee’s valuation does not accurately reflect India’s stellar economic fundamentals,” it said, while also noting that the currency’s fall helps offset some impact of the steep U.S. tariffs.

A trade deal with the U.S. is key to improving sentiment on Indian markets, a portfolio manager at a hedge fund said.

“It becomes complicated to project long-term growth for India when the country finds itself in a complicated geopolitical spot,” they added, referring to the reticence among foreign investors towards buying Indian assets.

Foreign investors have net sold over $4 billion of local stocks in January so far, adding to the record $19 billion outflow in 2025. DBS Bank India expects the Indian rupee to fall to 93-94 this year as capital inflows dwindle.