Indian Rupee Likely to Open Around 88.50; RBI Intervened to Shore Up Currency Amid Dollar Strength

The Indian rupee hovered near its historic low, settling around 88.75 to the US dollar on Monday. Traders indicated that the RBI stepped in before market open by selling dollars through state-owned banks to prevent the rupee from breaching the critical 88.80 level, which has acted as a defensive floor multiple

The rupee’s depreciation has been driven by a combination of a strong US dollar—buoyed by hawkish Federal Reserve commentary—and persistent dollar demand from importers hedging their exposure. The dollar index hit a near three-month high, placing pressure on Asian currencies, including the rupee.

Despite the central bank's active interventions to stabilize the rupee, market participants remain cautious due to ongoing global uncertainties and the prospect of slower progress in India-US trade negotiations. Analysts expect rupee trading to remain within the 88.50 to 89.10 range in the near term.

The RBI's ample foreign exchange reserves, estimated around $700 billion, provide the firepower for such interventions to manage currency volatility effectively.

Key Highlights:

Rupee close to all-time low at around 88.75 vs US dollar

Reserve Bank of India intervened in NDF and spot markets pre-open

Strong dollar and importer hedging driving rupee depreciation

RBI’s intervention aimed at defending 88.80 support level

Trade talks and global factors keep rupee under near-term pressure

Expected trading range: 88.50-89.10 in short term

RBI’s foreign reserves bolster capacity to manage volatility

Sources: Reuters, Economic Times, Finance Outlook India, ScanX Trade