RBI dollar sales keep rupee shy of 92 on Friday, hit new closing low

RBI intervention via dollar sales prevented the rupee from breaching the 92 mark, even as it closed at a fresh low amid FPI outflows and dollar strength

The rupee settled at a fresh closing low of 91.99 against the dollar on Friday, weighed down by continuous outflows from domestic equities and a strengthening US dollar, dealers said. The local currency had closed at 91.96 per dollar on Thursday.

 

Market participants said the Reserve Bank of India (RBI) likely intervened in the foreign exchange market through dollar sales, helping prevent the rupee from breaching the psychologically crucial 92 per dollar level.

 

The rise in the dollar index further weighed on the local currency. The dollar index rose to 96.77 on Friday, against the previous close of 96.33. The dollar index measures the strength of the greenback against a basket of six major currencies.

 

“The FII outflows and demand for dollar ahead of the Budget are keeping the rupee under pressure,” said a dealer.

 

The dollar index edged higher as markets awaited the appointment of US President Donald Trump’s nominee to lead the Federal Reserve, replacing current Chair Jerome Powell, whose term expires in May 2026. Trump has nominated Federal Reserve critic Kevin Warsh as Powell’s successor.

 

So far in the current financial year, the rupee has depreciated by 7.05 per cent, while it has weakened by 2.26 per cent against the dollar in January alone.

 

“The RBI might have been offering dollars at 91.93 levels during the day but allowed the lowest closure today. Only RBI selling has allowed rupee to remain protected from crossing the 92 level, else there is very good buying of dollar happening on a daily basis,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.

 

With a trade deal still proving elusive, foreign portfolio investors remain underweight on India, exerting sustained pressure on the rupee. While the central bank can act to smooth volatility and moderate the pace of depreciation, it cannot alter the currency’s broader trajectory unless underlying structural factors improve.

 

While a segment of the market remains optimistic about the prospects of a trade agreement with the US by end-Marc, which they believe could lift the rupee to around 90 per dollar by the end of the financial year, others expect the currency to weaken further to about 92.50 per dollar over the same period.