Rupee slides to record low amid US visa, trade concerns; ends at 88.75/$

The Indian Rupee closed at a fresh record low on Monday as the US visa fee hike and trade policy uncertainty weighed on sentiment.

 

The domestic currency ended 44 paise lower at 88.75 against the dollar on Tuesday, according to Bloomberg. During the session, the rupee hit an all-time low of 88.79, tracking the depreciation so far this year to 3.54 per cent. In the last 12 months, the currency has fallen by 5.86 per cent. 

 

The hike in H-1B visa fees sparked worries over remittances and potential equity outflows from India's information technology IT sector, Kunal Sodhani, head of treasury at Shinhan Bank, noted. Outflows by foreign portfolio investors (FPIs) and India-US tariff uncertainty continue to weigh on the Rupee, he added. 

   

FPIs offloaded stocks worth ₹2,910.09 crore on Monday and have sold equities worth ₹1.37 trillion so far this year, according to NSDL data. 

 

Oil demand was seen as well today, and the weakness remained in sync with its other Asian currencies, Sodhani said. "For the dollar-rupee pain, 88.10 remains a good base which seems to have shifted from 87.70 levels, while 89.00 levels are on cards."

 

Donald Trump over the weekend signed an executive order raising the H-1B application fee to $100,000, from the earlier $2,000–5,000. The White House clarified it will be a one-time payment, effective September 21, potentially pressuring margins of Indian outsourcers.

 

The Reserve Bank of India (RBI) has largely refrained from direct intervention in the currency market, allowing for heightened volatility and the possibility of further rupee depreciation, as it continues to hit new lows against major currencies, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said earlier. 

 

Meanwhile, during the session, the HSBC Flash India Composite Output Index, which measures the combined performance of India’s manufacturing and service sectors, fell to 61.9 in September from 63.2 in August, marking a modest slowdown but still indicating a sharp rate of expansion. 

 

The dollar index snapped a three-day winning streak, with traders focusing on the US inflation data later this week. The measure of the greenback against a basket of six major currencies was down 0.05 per cent at 97.29.

 

In commodities, crude oil was trading higher as global markets focus on oversupply risks and easing demand despite ongoing geopolitical tensions. Brent crude price was up 0.41 per cent at 66.84 per barrel, while WTI crude prices were higher by 0.56 per cent at 62.63 per barrel, as of 3:35 PM IST.