Indian rupee hits all-time low against USD ahead of Budget
31 Jan 2025

The Indian rupee has hit an all-time low, trading at 86.65 per dollar today. The fall exceeds its previous lowest value of 86.6475, recorded earlier this month.

The depreciation follows the possible US trade tariffs announced by President Donald Trump, causing most Asian currencies to falter.

In response to the fall, the Reserve Bank of India (RBI) is believed to have intervened to bolster the local currency, as per insights from traders.

RBI's intervention and foreign portfolio outflows
Market response

State-owned banks were seen selling dollars, probably on RBI's behalf, to curb the rupee's fall.

The rupee has also been affected by steady foreign portfolio outflows with foreign investors dumping nearly $9 billion of local stocks and bonds in January alone.

These factors have led to a 1.2% decline in the rupee's value over January, making it one of the worst-performing currencies among its regional peers.

Upcoming events to shape rupee's trajectory
Future outlook

The upcoming Union Budget announcement on February 1 and developments on US trade tariffs and their impact on the dollar are expected to determine the rupee's future course.

Ahead of these key events, Amit Pabari, managing director at FX advisory firm CR Forex, predicts that the rupee is "likely to stay volatile between the range of 86.20-86.80."

Meanwhile, dollar-rupee forward premiums rose slightly ahead of the RBI's $5 billion six-month dollar/rupee buy-sell swap auction today.