New Delhi:  The Reserve Bank of India (RBI) stepped in on Monday to prevent the rupee from slipping below its record low, as the currency came under pressure from a strong US dollar and continued demand for foreign currency by importers.

Traders said that several state-run banks were seen selling US dollars in the foreign exchange market, an action widely believed to be on behalf of the central bank. This move helped stabilize the rupee around 88.76 against the US dollar, just a few paise away from its all-time low of 88.80.

The rupee has been struggling in recent weeks due to the strength of the US dollar, which remains firm as markets expect the Federal Reserve to keep interest rates higher for longer. The situation has been worsened by steady demand from importers who need dollars to meet payment obligations.

In addition, foreign investors have been pulling money out of Indian markets. Recent data showed overseas investors withdrew nearly 288 million dollars from equities and about 86 million dollars from bonds at the end of October. These outflows have added further pressure on the local currency.

According to market analysts, the central bank has already spent between 3 and 5 billion dollars last month to support the rupee through direct interventions in the spot and non-deliverable forward markets. The RBI’s strategy appears to be focused on preventing sharp volatility rather than defending any fixed level.

A weaker rupee makes imports, including crude oil and electronics, more expensive and can increase inflation. Economists warn that if the currency continues to lose value, it may become harder for the RBI to cut interest rates in the coming months.

However, a lower rupee could slightly benefit exporters by making Indian goods cheaper abroad, though the gains may not be significant if global demand remains weak.

Market watchers are now keeping an eye on how aggressively the RBI will continue to intervene. The direction of the US dollar, global oil prices, and foreign investment flows will determine whether the rupee can stay above its record low in the coming days.