Rupee fell to a fresh low of 88.26 on Friday, down 11 paise from the previous close. During the day, it went to a low of 88.36 before some recovery. The domestic currency has fallen 3.3% in the current financial year.
“The rumor of imposing tariffs on the Indian IT sector was the main reason for the rupee to fall today (Friday). It went to a low of 88.36, but RBI intervention led to some appreciation,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP. When the news was denied, the currency made some gains, he added.
RBI has likely intervened at 88.30-88.35 level, preventing rupee from further depreciation,” said a dealer at a private sector bank. He further said that chances of rupee touching 89 are high if RBI is not protecting.
Factors behind the Rupee’s slide
The demand from importers along with FPI outflows also contributed to the depreciation, said another forex dealer.
The domestic currency continued to be the worst performer among its Asian peers. With appreciating 8.2%, Taiwanese dollar is the outperformer followed by South Korean won, which has risen 5.8% in FY26.
The rupee breached 88 for the first time in last week and closed at an all-time low of 88.20, a couple of days after the US imposed a 50% tariff on Indian exports. According to the FE poll earlier this week, economists and currency analysts expect the rupee to stabilise between 88–88.50 in the near-term and RBI to prevent the currency from 89 level.
Outlook: A wait-and-see approach
Rupee will remain under pressure as long as India faces a 50% tariff. Further, FPI outflows from equity continue to weigh on the domestic currency. FPI offloaded equities worth Rs 37,823 crore in August and Rs 3,300 crore in September so far.
“Until the tariff issue is settled, we are going to get out of the syndrome of rupee weakening, and therefore I expect the rupee to decline further,” said Bhansali. Currency traders see 88.50 as the next crucial level for rupee and they expect the currency to trade in the range of 88-88.75 in the near-term.