Rupee hits fresh closing low of 88.76 on outflows, US dollar demand

The rupee closed at 88.76 per dollar, weighed by foreign outflows and corporate demand, even as RBI intervention capped losses; bond yields rose on higher borrowing

The rupee reversed early gains to settle at a fresh closing low of 88.76 per dollar due to foreign outflows and corporate demand for dollars, according to dealers. The currency had settled at 88.72 per dollar on Friday.

 

“The rupee made a high of 88.665 before capitulating to the demand for foreign portfolio investments (FPIs) along with the month-end demand, subsequently making a low of 88.7750 and then eventually closing at 88.76, its lowest closing,” Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors, said.

 

Market participants said the rupee did not depreciate further on Monday on the back of dollar sales by state-owned banks, likely on behalf of the Reserve Bank of India (RBI). 

 

The rupee has depreciated by 3.7 per cent in 2025-26 (FY26) so far, and has witnessed 3.54 per cent depreciation in the current calendar year (2025).

 

Meanwhile, government bond yields rose due to the Centre’s increased borrowings through the 10-year bond in the October-March borrowing plan. The yield on the benchmark 10-year government bond settled at 6.55 per cent, against the previous close of 6.52 per cent. It fell up to 6.57 per cent during the day.

 

Market participants said mutual funds houses were the major sellers.

 

“The supply of ₹32,000 crore on Friday is leading to selling. People are expecting a new 10-year paper to be announced, hence they are making space for it,” a dealer at a primary dealership said. “Additionally, mutual funds were selling because of redemptions coming up,” he added.

 

In the second half, the share of borrowing (including green bonds) under different maturities will be: 3-year (6.6 per cent), 5-year (13.3 per cent), 7-year (8.1 per cent), 10-year (28.4 per cent), 15-year (14.2 per cent), 30-year (9.2 per cent), 40-year (11.1 per cent) and 50-year (9.2 per cent).

 

The market was also cautious ahead of the RBI’s Monetary Policy Committee (MPC) meeting outcome on Wednesday, dealers said. The panel is expected to maintain a status quo at the October meeting scheduled between September 29 and October 1.