Key Moments
- The Indian rupee closed at 91.9550 per dollar after touching an intraday low of 91.9850.
- Dollar demand from maturing non-deliverable forward positions and corporate hedging pressured the rupee.
- The Reserve Bank of India was seen likely intervening to guard the 92 per dollar level, complicating its broader liquidity efforts.
Rupee Marks Fresh Record Low
The Indian rupee weakened to a new record low against the U.S. dollar on Thursday, as demand for the greenback intensified. The currency finished the session at 91.9550 per dollar, a 0.2% decline from its prior close. In intraday trade, the rupee slipped to 91.9850 before recovering slightly into the close.
Drivers: Forward Maturities and Corporate Hedging
Market participants attributed the rupee’s slide to increased dollar buying tied to the maturity of non-deliverable forward contracts, as well as hedging needs from corporates. These flows added to pressure on the local currency, pushing it toward the closely watched 92 per dollar mark.
| Indicator | Level | Comment |
|---|---|---|
| Closing USD/INR rate | 91.9550 | Down 0.2% from previous close |
| Intraday low for rupee | 91.9850 per dollar | Record weakest level during the session |
| Key psychological level | 92 per dollar | RBI seen acting to prevent a break above this level |
RBI Seen Leaning Against Further Weakness
The Reserve Bank of India was widely viewed as having stepped in to curb additional rupee depreciation as the exchange rate approached the psychologically significant 92 per dollar threshold. Traders noted that the central bank was likely active to discourage a clean break above that level.
Spillover Impact on Government Bonds
The rupee’s weakness extended its influence into the domestic bond market. Indian government securities were affected as the RBI’s attempts to enhance liquidity in the banking system ran up against the need to intervene in the foreign exchange market. This created a policy trade-off, with efforts to support market liquidity being partially counterbalanced by foreign exchange operations.
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