The Indian Rupee recorded a new all-time low on Tuesday, provisionally settling at 88.79 against the U.S. dollar, marking a 4 paise decline. This downturn is largely attributed to a steady outflow of foreign capital amidst a climate of global trade uncertainty.
However, the local currency was somewhat shielded from a more significant drop by a sharp fall in global crude oil prices and a slight weakening of the greenback, according to reports from forex traders. Market attention is now squarely focused on the Reserve Bank of India’s (RBI) Monetary Policy Committee decision, which is scheduled to be announced on Wednesday, October 1.
Trading commenced at 88.73 against the dollar in the interbank foreign exchange, with the rupee fluctuating between 88.69 and 88.80 before its provisional close. On the preceding Monday, the rupee had already shown a slight dip, consolidating in a narrow range to settle 3 paise lower at 88.75 against the U.S. dollar.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, commented on the situation, stating, “Constant pressure from Foreign Portfolio Investors (FPIs) buying dollars has pushed the rupee down. The RBI appears to be actively supplying dollars to counter this. The rupee remains vulnerable to FPI selling, a trend exacerbated by the trade challenges observed since August, following U.S. President Donald Trump’s imposition of 50% tariffs on Indian exports.” Bhansali anticipates the rupee to trade within a range of 88.50 to 89.00 on Wednesday.
The upcoming RBI meeting is particularly significant, taking place against a backdrop of escalating geopolitical tensions and the U.S.’s recent announcement of a 50% tariff on certain Indian shipments. Adding to the complex global financial landscape, the dollar index, which measures the dollar’s strength against a basket of six major currencies, was down by 0.11%, trading at 97.79. Meanwhile, Brent crude, the international benchmark for oil, saw a 1.03% decrease in futures trade, settling at $67.27 per barrel.
Domestically, the equity market also reflected caution. The Sensex closed down 97.32 points at 80,267.62, while the Nifty slipped 23.80 points to 24,611.10. Foreign Institutional Investors (FIIs) were net sellers, offloading equities worth ₹2,831.59 crore on Monday.
In a related development, the U.S. has declared a new policy to impose a 100% tariff on branded or patented drugs imported from October 1, with an exemption only for pharmaceutical companies that establish manufacturing plants within the United States.