Rupee ends at 88.16, pares early gains on importer dollar demand

The rupee gained in early trade on strong equities and trimmed offshore positions but settled at 88.16 a dollar as importer demand offset support from economic data

After hitting record lows for two consecutive days, the rupee gained against the US dollar in early trade but gave up most gains due to dollar demand by importers and settled at 88.16 compared to Monday’s close of 88.2.

 

Intraday, the Indian currency touched 87.84, appreciating 0.41 per cent, on the back of recovery in the domestic equity market and trimming in offshore positions, said dealers.

 

In 2025 so far, the rupee has depreciated 2.89 per cent, making it the worst performer among Asian peers.

 

“Recovery in the domestic equity markets is instilling some confidence to attract further foreign portfolio investor (FPI) flows. Offshore positions are also getting trimmed which lead to some appreciation in the rupee. However, feeds on the India-US tariff front continues to be an important element to watch out for, which may put some pressure on the rupee. According to charts, 87.7 levels may act as an important support, while 88.14 acts as first resistance followed by 88.35 levels,” said Kunal Sodhani, head treasury, Shinhan Bank India.

 

 

Dealers said the Reserve Bank of India (RBI) may have intervened in the non-deliverable forwards market before the opening of the spot market. But it was not actively present thereafter.

 

“RBI may have intervened on Monday and possibly early Tuesday but FPI flows were there, leading to appreciation in the rupee,” said a dealer with a public sector bank. 

 

FPIs continue to pare holdings in both equities and debt, amid concerns that India’s trade deficit could widen following the Donald Trump administration’s 50 per cent tariff on Indian goods, among the steepest globally. So far this year, FPIs sold equities worth nearly ₹1.4 trillion, according to NSDL data.  

 

Additionally, strong domestic economic data also helped in strengthening the rupee, said dealers. Recent data showed a sharper-than-expected rise in India’s GDP growth as well as the highest manufacturing purchasing managers’ index reading since 2008.

 

India’s gross domestic product (GDP) grew 7.8 per cent in the first quarter (April-June) of the financial year 2025-26 (FY26), hitting a five-quarter high.  The manufacturing purchasing managers index (PMI) touched a nearly 18-year high of 59.3 in August.

  Meanwhile, Asian currencies were steady on Tuesday with investors awaiting US data that could shape expectations for Federal Reserve rate cuts this year. 

The focus is on two key releases — the August jobs report and the inflation print — both due before the September 16–17  US Federal Reserve's policy meeting.

  The dollar index, a measure of the greenback against a basket of six major currencies, was up 0.60 per cent at 98.35, a day after a US federal appeals court ruled that US President Donald Trump's trade tariffs were illegal.