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07-09-2025
Bureau Report + Agencies
NEW DELHI/ MUMBAI: The Indian rupee slipped to an all-time low on Monday, pressured by weakness in regional currencies and sustained outflows from local equities but central bank intervention helped avoid sharp losses, traders said.
The currency ended at 84.3925, eclipsing its previous record low of 84.3875 hit last week. The currency was down 0.02 percent on the day.
Dollar demand from oil companies and foreign banks, likely on behalf of custodial clients, kept the rupee under pressure, a salesperson at a foreign bank said.
Overseas investors have pulled out a net of about $2.5 billion from Indian stocks over November so far, adding to the $11 billion of outflows in October.
Benchmark Indian equity indices, the BSE Sensex and Nifty 50, closed nearly flat on the day. Asian currencies were down 0.1 to 0.6 percent while the dollar index was up 0.3 percent at 105.3, hovering close to a four-month high hit last week following Donald Trump’s victory in the US election.
The offshore Chinese yuan, a closely-watched peer of the rupee, was down 0.2 percent at 7.21. China unveiled a stimulus package on Friday which disappointed investors who had anticipated a greater fiscal push. Analysts expect Trump’s policies to put upward pressure on US inflation and bond yields, while limiting the Federal Reserve’s scope to ease policy.
“We see the dollar strengthening into year-end,” ING Bank said in a note. The bank reckons the dollar index may consolidate in the 104.5-105.5 range before breaking higher.
US stocks closed higher Friday to end a stellar week as Donald Trump’s election victory and a possible Republican Party sweep in Congress fueled expectations for favorable business policies.
Meanwhile, dollar-rupee forward premiums declined with the 1-year implied yield dropping to an over two-month low of 2.10 percent, pressured by strong receiving interest from foreign banks.
Meanwhile, the Indian rupee gave up modest early gains to trade little changed on Friday ahead of crucial key US labor market report due later in the day.
The US dollar slipped against most Asian currencies while Treasury yields dipped to their lowest in four months on strong wagers on a rate cut by the Federal Reserve later this month.
The rupee was at 88.1650 against the dollar, against its close at 88.1450 in the previous session.
The interest-rate expectation sensitive 2-year US Treasury yield fell to a four-month low in Asia trading, extending its decline to 3.59%.
Money markets are currently pricing in near certainty of a 25-basis-point rate cut by the Fed in September. The wagers were cemented by indications of weakness in US labor data released on Thursday.
“A negative surprise or sharp downward revision to July’s figure could put downward pressure on the USD,” MUFG said in a note, referring to the jobs report.
While a soft print may offer modest relief to the rupee, a rally is unlikely unless equity flows pick up meaningfully or there are positive developments related to US tariffs, a trader at a state-run bank said.
Indian exports to the US face a tariff of as much as 50%.
MUFG reckons the rupee could weaken to 89 by the first quarter of calendar year 2026 under the assumption that the steep tariffs remain for now but are eventually lowered to 25% sometime next year.
