Key Moments
- One-month USD/INR non-deliverable forwards signal an opening around 90.80–90.85 after a 90.73 close on Monday
- The rupee registered a new all-time intraday low of 90.7875, its third straight session of record weakness
- Traders describe the downturn as flow-driven and orderly, with volatility still contained despite intense pressure
Rupee Poised for Another Weak Open
The Indian rupee is expected to start trading at fresh record lows as investors contend with a worsening global risk environment and entrenched flow imbalances that continue to drag on the currency.
According to one-month non-deliverable forward (NDF) pricing, USD/INR is projected to open in the 90.80–90.85 band, pointing to further depreciation following the onshore close at 90.73 on Monday. During the previous session, the rupee fell to a new record intraday low of 90.7875, marking the third straight day in which it has set all-time weakness levels.
Flow Mismatches Drive Dollar Demand
Market participants attribute the latest leg of rupee weakness less to panic selling and more to persistent, structural flow dynamics. Bankers highlight an enduring gap between U.S. dollar demand and supply, with steady fixing-related dollar buying – likely associated with NDF maturities and portfolio outflows – emerging as a consistent pressure point.
Additional dollar purchases from state-owned enterprises have added to the strain on onshore liquidity, intensifying the impact of the underlying flow mismatch.
Hedging Behavior Deepens Imbalance
Hedging activity has further skewed the market. Importers have maintained robust hedging demand, reflecting ongoing concerns about further rupee depreciation. In contrast, exporter dollar selling has been muted, as many exporters are reluctant to lock in current levels and instead are holding out in anticipation of more favorable rates.
This divergence in behavior between importers and exporters has left the rupee more vulnerable, with even relatively modest increases in dollar demand exerting outsized pressure on the exchange rate.
| Indicator | Level / Range | Context |
|---|---|---|
| Monday onshore close (USD/INR) | 90.73 | Reference level before latest expected weak open |
| Expected NDF-indicated open (USD/INR) | 90.80–90.85 | Signals fresh record lows at the start of trading |
| Recent intraday all-time low (USD/INR) | 90.7875 | Hit in the previous session, third consecutive record low |
Portfolio Outflows Offset Domestic Strengths
Portfolio flows remain a central factor in the rupee’s slide. Ongoing foreign outflows from local equity and debt markets have overshadowed India’s longer-term structural positives, such as strong growth prospects and improving macroeconomic fundamentals. For now, these domestic strengths have offered only limited insulation against broader global risk aversion and a firm U.S. dollar.
Orderly Weakness but Persistent Pressure
Traders emphasize that the current phase of weakness appears to be driven primarily by flows rather than by speculative capitulation. Volatility has stayed contained, indicating that the market is digesting pressure gradually instead of undergoing a disorderly repricing of risk.
Absent a sustained reversal in portfolio flows, a meaningful improvement in global risk sentiment, or a clear positive catalyst related to trade, the rupee is expected to remain under strain. Without such triggers, further record lows in the near term cannot be ruled out.
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