The Indian rupee slipped to a fresh record low of 88.80 against the US dollar on Tuesday, weighed down by persistent foreign portfolio outflows and uncertainty in global trade. The decline, however, was cushioned by easing crude oil prices and a softer greenback, according to forex traders.
Trading session details
At the interbank foreign exchange, the domestic currency opened at 88.73 and moved within a narrow band of 88.69 to 88.85 before closing at 88.80, down 5 paise from its previous close. On Monday, the rupee had settled marginally lower by 3 paise at 88.75 against the dollar.
Market participants noted that the rupee remained under pressure throughout the session due to steady dollar demand from foreign portfolio investors (FPIs). “Constant pressure from FPIs buying dollars brought down the rupee, where the RBI seems to be present, supplying dollars,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
He added that the local unit has remained vulnerable to overseas investors pulling funds out of Indian equities since August, following the imposition of 50 per cent tariffs on Indian exports by US President Donald Trump.
Factors cushioning the fall
Despite downward pressure, global cues offered some relief. The dollar index, which measures the greenback’s strength against a basket of six major currencies, slipped 0.11 per cent to 97.79. Brent crude, the international benchmark, was trading 1.03 per cent lower at USD 67.27 per barrel in futures trade, easing fears of a widening trade deficit.
RBI policy in focus
Investors are closely watching the Reserve Bank of India’s Monetary Policy Committee (MPC) decision, which is scheduled for Wednesday. The meeting comes at a sensitive time, with geopolitical tensions, high import tariffs, and continued capital outflows weighing heavily on the currency. Analysts expect the rupee to trade in a tight range of 88.50 to 89.00 in the near term.
Equity market performance
The weakness in the rupee was mirrored in domestic equities. The BSE Sensex fell 97.32 points to close at 80,267.62, while the NSE Nifty slipped 23.80 points to end at 24,611.10. According to exchange data, FPIs sold equities worth ₹2,831.59 crore on Monday, extending the bearish sentiment.
Additional trade concerns
Adding to market anxieties, the US government announced that from October 1 it will impose a 100 per cent tariff on branded or patented drugs entering the American market, except for pharmaceutical companies setting up manufacturing units in the US. This move has triggered concerns within India’s pharmaceutical sector, a key contributor to exports.
Outlook
With the rupee touching an all-time low, analysts believe the near-term trajectory will depend on RBI’s stance, capital flows, and the global trade environment. For now, traders remain cautious, expecting volatility to persist until clarity emerges on policy measures and tariff disputes.