The Indian rupee fell a fresh low on Friday amid pressure from importers. The currency closed at 89.45 against the dollar, after hitting intra-day low at 89.49. However, the intervention from the Reserve Bank of India (RBI) through its dollar sales prevented the further fall, said forex traders.
Trade Deal Delay and Worst Asian Performer
“The currency will continue to be under pressure unless and until India signs a trade deal with the US. However, the RBI was present with its intervention (on Friday), after which it protected the currency at 89.50 levels,” said a dealer at a state-owned bank. It may breach 90 if there is further delay in announcement of the trade deal, said market participants.
The Indian rupee breached 89 level for the first time on November 21 as delay in US-India trade continue to weigh on the currency. So far in the year, the currency fell 4.46%, the highest in three years. This makes rupee the worst performing currency compared to its Asian peers in FY26, followed by Japanese yen falling 3.95%.
RBI’s Defense and the ‘Trade Deal Bounce’
According to Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors LLP, rupee will likely trade in the range of 89.25-90 in the near-term, where the 90 level could be well-protected by the RBI. He added that, however, there is an optimism on the trade deal, which will support rupee.
“After the trade deal is finalised and the appreciation of rupee followed by that, we will likely witness a significant depreciation again. This will happen because the RBI will start buying dollars to cover its oversold positions. By the end of November, these short positions are expected to be around $70 billion-$72 billion.” The RBI’s dollar short forward positions rose $6 billion to $59.4 billion in September, the first increase in seven months.
