Rupee hits record low for second session; pares losses to close flat

Indian Rupee today: The domestic currency closed 1 paise higher at 88.20 against the dollar on Monday, according to Bloomberg

The Indian Rupee hit a record intraday low for the second straight session on Monday but pared losses to end flat amid trade tensions and foreign equity outflows.

 

The domestic currency closed 1 paise higher at 88.20 against the dollar on Monday, according to Bloomberg. During the session, the currency fell to a record low of 88.34 against the greenback. So far this year, the rupee has depreciated 2.93 per cent, making it the worst performer among Asian peers.

 

The currency could remain under pressure as United States (US) tariffs, foreign portfolio investor outflows, and weakness in government bonds weigh on sentiment, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. Yields on the 10-year bond rose to nearly 6.70 per cent before easing to 6.59 per cent.

 

   

The 50 per cent tariffs are expected to hurt portfolio inflows, even as India continues talks with the US on trade and tariff issues, Bhansali said. So far this year, foreign portfolio investors have sold nearly ₹1.4 trillion in domestic equities.  

 

Meanwhile, 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. However, Nominal GDP increased 8.8 per cent to ₹86.05 trillion during the June quarter. A slowdown is likely in the second quarter due to spillover effects from the tariffs, analysts said. 

 

Foreign exchange reserves fell by $5 billion to $691 billion as of August 22, 2025, as the RBI sold dollars to support the rupee. The central bank may allow further depreciation to maintain competitiveness against peers facing lower tariffs, Bhansali said. "Exporters who sold at 87.80 may now wait for further declines, while importers are advised to hedge on major dips and cover near-term payables on smaller ones."

 

In geopolitical news, Indian Prime Minister Narendra Modi said New Delhi was committed to improving ties with China in a key meeting with President Xi Jinping on Sunday. Both leaders discussed the need to expand trade and investment ties against the backdrop of US tariffs.

 

The dollar index, a measure of the greenback against a basket of six major currencies, was down 0.13 per cent at 97.64. This comes after a US federal appeals court ruled that US President Donald Trump's trade tariffs were illegal. 

 

In commodities, crude oil prices rose amid the impact of US tariffs on demand. Brent crude price was up 0.93 per cent at 68.11 per barrel, while WTI crude prices were higher by 1.03 per cent at 64.67 per barrel, as of 3:40 PM IST.