Overview
- The currency fell past the psychologically key ₹89 level to an intraday record low near ₹89.45 on Friday after closing at ₹88.71 in the prior session.
- Governor Sanjay Malhotra attributed the depreciation to stronger dollar demand and trade factors, reiterating that FX reserves near $687–690 billion provide a buffer.
- Traders reported the RBI has frequently sold dollars near ₹88.80, turning it into a soft cap, while Deutsche Bank flagged tighter rupee liquidity and projected OMO bond purchases and a possible 25 bps rate cut in December.
- A Union Bank of India report sees USD/INR drifting toward ₹90 by March 2026, with ₹88.30 as support, ₹88.80 as resistance that opens ₹89.30 if broken, and scope to ₹87.80 on sustained equity inflows or concrete progress on India–US trade talks; a finalised deal could draw $2–3 billion.
- Dollar strength after Fed minutes lowered odds of a December cut, risk-off sentiment, and steep US tariffs on Indian goods that widened the trade deficit and pressured exports added to rupee headwinds.