The Indian rupee weakening trend extended into Tuesday’s trading session, with the currency breaching the 91-per-dollar mark for the first time in nearly a month. Persistent flow-based dollar demand has tightened the squeeze on the local unit, bringing it within striking distance of its historic low and keeping market participants on edge.
The rupee opened marginally weaker but quickly slipped further, reflecting fragile sentiment and rising demand for the US currency. Traders say the pace of the Indian rupee weakening has been driven more by capital flows than by any single macroeconomic shock.
A Sharp Intraday Slide Raises Fresh Concerns
During early trade, the rupee fell rapidly to 91.0525 before recovering slightly to around 91.02 by 10:20 a.m. IST. This marked a notable decline from its previous close of 90.91. The currency also touched an intraday low of 90.99, reinforcing concerns that the Indian rupee weakening phase may not be over yet.
Strong dollar demand from importers and continuous portfolio-related outflows are the main causes of the Indian rupee’s decline, according to market participants. Investors have continued to favor the dollar due to the cautious global risk mood, which has increased pressure on emerging market currencies like the rupee.
Flow-based Dollar Demand Drives the Trend
Strong dollar demand from importers and continuous portfolio-related outflows are the main causes of the Indian rupee’s decline, according to market participants. Investors have continued to favor the dollar due to the cautious global risk mood, which has increased pressure on emerging market currencies like the rupee.
“The moves are dependent on the flows scenario, with focus turning to the RBI if the local currency is close to breaching any major level,” said a currency trader at a state-run bank. This underscores how near-term movements in the Indian rupee weakening cycle are being dictated by demand-supply dynamics in the foreign exchange market.
RBI’s Quiet Presence Offers Limited Reassurance
The Reserve Bank of India has come under scrutiny as the declining value of the Indian rupee brings the currency closer to all-time lows. The central bank’s almost daily involvement in the market, according to bankers, has given rupee bulls some confidence and allayed concerns about an impending break of historic levels.
However, traders describe the RBI’s recent interventions as measured rather than aggressive. Instead of defending a single price point, the central bank has reportedly offered dollars at multiple levels, signalling an intent to manage volatility rather than reverse the broader trend of Indian rupee weakening.
Strategy Over Shock
According to analysts, this calibrated strategy discourages speculative positions while enabling the RBI to preserve foreign exchange reserves. The central bank lessens the chance of encouraging one-way wagers against the rupee by avoiding a robust defense at one level.
This approach implies that some devaluation is being accepted as part of larger market changes, even though abrupt and chaotic movements will be restricted. As a result, rather than experiencing abrupt, unsettling fluctuations, the Indian rupee’s decline may continue in a gradual fashion.
What Lies ahead for the Rupee?
It is anticipated that the 91-per-dollar level will continue to be a significant psychological and technical level in the future. While a prolonged breach would encourage more selling pressure, the RBI’s continuous presence might assist stabilize the trajectory of the Indian rupee’s decline.
For the time being, traders will probably continue to exercise caution, keeping a careful eye on dollar flows, importer demand, and central bank signals. The narrative of the Indian rupee’s decline is expected to stay sharply focused in the coming days as it hovers around historic lows.
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