The Indian rupee fell to an all-time low on Friday, down 0.2% for the week, to close at $85.9650 against the US dollar. The rupee has closed at new lows for three consecutive days this week, marking the 10th consecutive week of declines and surpassing Thursday’s all-time low of 85.9325 rupees.
The currency faces consistent pressure from a strong dollar and weak capital inflows. The dollar index rose above 109, nearing a two-year high, as markets await U.S. non-farm employment data that could shape expectations for a rate cut from the U.S. Federal Reserve.
A state-run bank believed to be acting on behalf of the Reserve Bank of India (RBI) intervened to sell the dollar on Friday, helping limit losses for the rupee, three traders cited in a Reuters report said.
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Anuj Chaudhary, research analyst at Mirae Asset Sharekhan, expects the pressure on the currency to continue in the short term, adding, “Weak domestic market trends, strong dollar and sustained FII outflows will continue to push the rupee “There may be downward pressure on prices,” he said. Additionally, rising oil prices and rising U.S. Treasury yields could further pressure the domestic sector. However, RBI intervention could support the rupee at a lower level. Traders may take cues from U.S. nonfarm payrolls reports and consumer sentiment data. He added that he expects the rupee to remain in the range of 85.80-86.15 rupees to the dollar.
Persistent headwinds, including a rising dollar and global economic uncertainty, are weighing on the rupee. However, the RBI’s regular interventions have provided some stability and cushioned the decline.
