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Rupee Hits Record Low, RBI Steps In
31 Jan
Summary
- Rupee closed at a record low, nearing 92/$1.
- RBI interventions prevented breaching the 92/$1 level.
- January marked the rupee's worst monthly performance in over three years.
The Indian rupee concluded Friday at a record closing low, closing just two paise above the 92/$1 level. The Reserve Bank of India (RBI) implemented timely interventions, preventing the currency from breaching this significant psychological barrier as the national Budget approached on Sunday.
January proved to be the rupee's worst month in over three years, with a 2.3% depreciation. Traders reported that the RBI sold dollars at weaker levels to support the currency, which experienced a trading range between 91.98 and 91.84. Persistent foreign capital outflows and firm corporate dollar demand were identified as major contributors to the rupee's strain.
Market participants are now focusing on the upcoming Budget on Sunday. Economists have cautioned that restoring investor confidence will be a considerable challenge, especially as ongoing uncertainty surrounding a potential trade deal with the United States continues to exert pressure on financial markets and the rupee. The Economic Survey, released on Thursday, highlighted the rupee's underperformance in FY26 despite India's robust economic growth, lower inflation, and a favorable outlook, noting that the currency was "punching below its weight."
