Rupee at Record Low: RBI Faces Tough Call as Currency Breaches 89
Rupee hits record low at 89 against the US dollar. RBI’s strategy under spotlight as markets weigh benefits for exporters against risks for importers.
Rupee at record low: The Indian currency breaches 89 against the US dollar; RBI’s next move remains under market watch.
The Indian rupee plunged to an all-time low on Monday, breaching the 89 mark against the US dollar, sparking fresh concerns in financial markets. The sharp fall follows last week’s slide past 88 and has prompted banks and corporates to scale back trading exposure amid mounting pressure on importers.
The depreciation comes at a time when Indian businesses are battling US tariffs and global market volatility. Analysts believe the Reserve Bank of India (RBI) may be allowing the rupee to weaken in order to support exporters and cushion the trade deficit. “Bearish pressure will persist unless the US tariff issue is resolved quickly. The RBI seems to be tolerating depreciation for the sake of export competitiveness,” said Haresh Desai, founder of Rajwade Treasury Consultants.
Bankers note that RBI has stepped back from aggressive interventions, letting the market dictate the rupee’s trajectory. “Left entirely to the market, the 89-level would have been breached earlier. It seems more of a conscious decision by RBI,” said Samir Lodha, MD of QuantArt.
A weaker rupee hurts importers and corporates with unhedged forex exposure but could prove beneficial for exporters. It may also boost the government’s fiscal position by increasing RBI dividends, particularly critical with the 8th Pay Commission and tax reforms ahead.
Since March, the rupee has fallen over 3.3%, sliding from 85.47 under Governor Sanjay Malhotra’s flexible currency regime. Now, all eyes are on the RBI’s next move—whether it will allow further depreciation or step in to stabilise the market.
