The rupee weakened to 91.81 per US dollar, slipping past its previous record low of 91.74 hit a day earlier, and ended about 0.2% lower on the session. The currency had opened stronger at 91.43, but the momentum quickly reversed as buying interest in the dollar resurfaced.
So far this year, the rupee has depreciated 5.3% against the US dollar, putting it on course for its steepest annual fall since 2022, according to Reuters data.
Market participants said the renewed pressure came after importers stepped in to buy dollars through private sector banks to meet near-term payment obligations.
“It looks like the opening flow was limited; once it passed, USD/INR was back to being bid,” a currency trader at a private sector bank told Reuters.
Traders also noted the absence of intervention from the Reserve Bank of India (RBI) so far.
“The RBI is pretty much the only meaningful receiver in premiums,” said a swap trader at a state-run bank. “When they’re not around, the premiums naturally drift higher.”
RBI’s Forex Strategy Under Scrutiny
Meanwhile, the RBI’s holdings of US Treasury bonds have dropped to a five-year low, reflecting efforts to support the rupee and diversify India’s foreign exchange reserves. Treasury holdings have fallen to $174 billion, down 26% from their 2023 peak, and now account for roughly one-third of India’s forex reserves, compared with about 40% a year ago.
Part of this shift is linked to the central bank’s attempts to defend the rupee, which has been battered by external pressures, including delays in an India–US trade deal following Washington’s imposition of 50% tariffs on Indian exports, the highest in Asia.
By selling US Treasury holdings, the RBI can free up funds to buy rupees in the market, a move aimed at stabilising the currency amid persistent volatility.
