Rupee hits intraday low, recovers to 89.98 as foreign banks sell dollars

The rupee hit 90.41 per dollar intraday on Thursday before recovering to close at 89.98, as foreign banks sold dollars and RBI intervention stayed limited amid outflows and trade-deal uncertainty

The rupee extended its losses on Thursday to touch a fresh low of 90.41 per dollar during the day as capital outflows continued, coupled with lingering uncertainty over trade negotiations with the United States (US), which continued to weigh on market sentiment, dealers said.

 

Why did the rupee recover after hitting a new intraday low?

 

The rupee gained back all its intraday losses to close at 89.98 per dollar, improving from the previous close of 90.20 per dollar, on the back of dollar sales by foreign banks. There was limited intervention by the Reserve Bank of India (RBI), dealers said. 

The rupee has continued to fall against the greenback after breaking through the RBI’s earlier defence level near 88.80 per dollar.

 

“The recovery happened because of foreign banks selling dollars, not the RBI,” said a dealer at a state-owned bank. “The market is uncertain what level the RBI is looking at right now,” the person added.

 

What are market participants expecting for the rupee from here?

 

The rupee had stumbled past the psychological barrier of the 90-per-dollar mark to close at 90.20. The Indian unit is the worst-performing currency in 2025, depreciating almost 5 per cent.

 

Market participants said persistent dollar demand on any dip suggests any recovery in the rupee is likely to be shallow and short-lived, even as the RBI intervenes to smooth volatility rather than halt the move. While a sharp decline in the rupee from current levels appears unlikely, further depreciation into next year remains the base case.

 

How important is the US trade deal to the rupee’s outlook?

 

The course of the rupee now hinges on the trade deal, dealers said.

 

“We are still optimistic on the trade deal, and we see the rupee recovering to 89 per dollar to 88.50 per dollar by end of the year,” said Ritesh Bhansali, vice-president at Mecklai Financial Services. “If the trade deal doesn’t happen, the rupee might fall to 91 by the end of the financial year and 94 by end of 2026,” he added.

 

Some participants said that while broad dollar weakness is seen next calendar year, the rupee is likely to underperform. While a trade deal could trigger an initial strengthening, the RBI is expected to maintain a firm floor under USD/INR to keep the pair attractive for dollar sellers, encourage inflows, and rebuild its reserve buffer.

 

“Rupee is likely to underperform amid broad dollar weakness. Even if we get a trade deal, after an initial knee-jerk reaction, RBI will likely keep a firm floor under USD/INR to keep it attractive for those looking to sell dollars (encourage inflows) and to rebuild its reserve kitty,” said Abhishek Goenka, founder and chief executive officer, IFA Global.