MUMBAI: The Indian rupee slipped to its weakest closing level on record on Monday, pressured by heightened dollar demand from maturing non-deliverable forward positions and an uptick in oil prices.
The rupee closed at 95.0875 against the US dollar, down 0.18 percent from its previous close.
Reuters reported, citing sources, that India’s central bank is studying ways to mobilise dollar inflows to bolster its foreign exchange buffers and cushion rising pressure on the rupee from a spike in oil prices driven by the Iran war.
Among the steps being considered is reviving a mechanism last used in 2013 to draw in dollar deposits from non-resident Indians and the elimination of withholding tax on overseas government bond investors.
Persistent capital outflows have been a sore spot for the rupee for more than a year. In 2026 alone, overseas investors have net sold about USD20 billion of Indian stocks and bonds.
Over the course of the session on Monday, the rupee was moved by importer hedging, maturing NDF contracts and modest portfolio inflows while traders kept an eye on outcomes of local elections.
Indian Prime Minister Narendra Modi’s party was on course to win two of four crucial state elections, expanding its influence and weakening its key rival half-way into his third term in office.
Iran warned US forces not to enter the Strait of Hormuz after President Donald Trump said the United States would “guide out” ships stranded in the Gulf by the US-Israeli war on Iran.
Oil-sensitive Asian currencies were under pressure, with the Philippine peso, down 0.5 percent, leading losses. Brent crude oil futures drifted higher to nearly USD110 per barrel.
“In Asia, we continue to have a long bias for CNH, KRW and MYR, and advise hedging IDR, INR and PHP,” analysts at BofA Global Research said in a note.
The Chinese yuan, Korean won and Malaysian ringgit were all up between 0.1 percent and 0.4 percent.
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