Mumbai: The Indian rupee ended marginally lower on Thursday, closing just shy of its all-time low as persistent demand for the US dollar and ongoing trade tensions between India and the United States weighed on market sentiment. The domestic currency settled at ₹88.79 per US dollar, down by 4 paise from its previous close of ₹88.75.
Rupee trades in a narrow range
At the interbank foreign exchange market, the rupee opened at ₹88.76 against the greenback and traded within a narrow range throughout the day. It touched an intraday low of ₹88.79 and a high of ₹88.74 before settling at ₹88.79 (provisional).
On September 30, the rupee had slipped to a historic low of ₹88.80 against the dollar, a level that continues to act as a psychological threshold for traders.
Forex dealers said that the domestic currency traded with a slight negative bias, primarily influenced by strong importer demand for the US dollar and elevated global uncertainty. The absence of fresh economic data from the US, owing to the ongoing government shutdown, also led to a range-bound movement in the USD/INR pair.
Strong dollar and trade tensions weigh on sentiment
According to Anuj Choudhary, Research Analyst – Currency and Commodities at Mirae Asset ShareKhan, the rupee’s weakness was largely due to a stronger dollar and importer demand.
“Strong US dollar and importer demand weighed on the rupee. However, strength in the domestic equity markets and an overnight decline in crude oil prices cushioned the downside. Reports of possible RBI intervention also supported the local unit,” said Choudhary.
He added that while the rupee may trade with a slight positive bias in the short term, sharp appreciation is unlikely due to persistent global headwinds.
“The rupee could witness limited upside as a firm greenback and ongoing India–US trade tensions cap gains. Meanwhile, the expectation of a rate cut by the US Federal Reserve amid the shutdown could provide some support,” he noted.
Dollar index and crude prices remain steady
The dollar index, which measures the strength of the US currency against a basket of six major peers, was trading marginally higher by 0.01% at 98.92, indicating continued resilience of the greenback in global markets.
Meanwhile, Brent crude futures, the international benchmark, slipped slightly by 0.20% to $66.12 per barrel, providing some relief to oil-importing countries like India. Lower crude prices typically reduce import bills and help ease pressure on the rupee.
Domestic equities buoy investor confidence
Despite the rupee’s weakness, the domestic equity markets witnessed robust buying, reflecting optimism among investors. The BSE Sensex gained 398.44 points to close at 82,172.10, while the NSE Nifty advanced 135.65 points to end at 25,181.80.
According to exchange data, Foreign Institutional Investors (FIIs) bought equities worth ₹81.21 crore on Wednesday, showing continued confidence in Indian assets despite the rupee’s recent volatility.
RBI intervention likely as rupee nears record low
Market experts believe that the Reserve Bank of India (RBI) may step in to stabilise the rupee if it breaches the all-time low level again. The central bank has previously intervened through both direct dollar sales and liquidity adjustments to prevent excessive depreciation of the local currency.
“RBI intervention has been crucial in keeping volatility under check. The central bank appears to be ensuring that the rupee does not drift sharply below its recent lows,” said a Mumbai-based forex trader.
Outlook: cautious optimism amid global uncertainty
The near-term outlook for the rupee remains mixed. While domestic equities and lower crude prices offer some comfort, external factors — such as the strong US dollar, geopolitical tensions, and lack of clarity on US fiscal policies — continue to pose risks.
Choudhary expects the rupee to trade in the range of ₹88.50–₹89.10 per dollar in the coming sessions, depending on RBI actions and the outcome of global developments.
“We expect the rupee to consolidate near its current levels as traders await fresh cues from the US and global markets. A sustained breach below ₹88.80 could trigger renewed volatility,” he added.
As the rupee hovers close to its historic low, market participants are likely to keep a close watch on the RBI’s moves, the US shutdown situation, and upcoming macroeconomic data releases for further direction.