New Delhi: India’s currency, the rupee, is expected to remain steady around the 88.80 mark against the United States dollar, as the Reserve Bank of India (RBI) intensifies its market interventions to shield the domestic unit from further weakening. Despite global pressure and a stronger dollar index, the RBI’s consistent measures have ensured that the rupee remains anchored within a narrow range.
The rupee closed at 88.7775 on Monday, reflecting only a mild decline in comparison with previous sessions. The one-month non-deliverable forwards suggested that the opening levels would remain between 88.75 and 88.78. Traders across the interbank market noted that state-run banks, believed to be acting on behalf of the central bank, were actively selling dollars to prevent a further slide of the rupee.
A currency trader from a private sector bank said that dollar demand continues to outweigh supply, putting consistent pressure on the rupee. He observed that the 88.80 mark has become a psychological barrier in the market, with the RBI’s presence keeping volatility under control. Market participants believe that the central bank will continue to defend this level in the near term to maintain investor confidence and avoid speculative movements.
The rise in the U.S. dollar index has been one of the major factors influencing the rupee’s trajectory. The index, which measures the dollar’s performance against a basket of global currencies, edged closer to the 100 level during Asian trading hours. The dollar’s renewed strength stems from uncertainty surrounding the U.S. Federal Reserve’s next policy move. Hopes of a rate cut in December have faded after recent economic data showed persistent inflation and a resilient job market in the United States.
On the domestic front, other indicators remain mixed. The one-month forward premium for the rupee stood near 14 paise, reflecting stable short-term outlooks. However, foreign portfolio investors have pulled out significant funds from Indian markets. As of October 31, they had sold around 855 million dollars in equities and 14 million dollars in bonds. The sell-off indicates growing caution among investors amid global market uncertainty and fluctuating yields.
Meanwhile, global crude oil prices have offered slight relief to the Indian economy. Brent futures slipped to around 64.70 dollars per barrel, easing import costs. Since India depends heavily on imported crude, lower prices could provide temporary comfort to the rupee by reducing the overall demand for foreign currency.
Economists suggest that the RBI’s continued intervention will remain crucial in maintaining exchange rate stability. However, they also warn that excessive intervention could lead to a depletion of foreign exchange reserves if global volatility persists. Any sustained weakening of the rupee beyond the current level could push up import costs, fuel inflation, and affect corporate margins, especially in sectors dependent on imported raw materials.
In the near term, traders expect the rupee to hover close to the 88.80 mark unless there is a major shift in global market sentiment. The RBI’s cautious yet firm approach has helped prevent panic selling, but the broader outlook will depend on global interest rate trends, foreign investment flows, and crude oil prices.
For India’s economy, a stable rupee is vital in managing inflation and ensuring smooth trade operations. As the world’s fifth-largest economy navigates an uncertain global environment, the RBI’s balancing act between defending the rupee and conserving reserves will determine the currency’s path in the coming weeks.