Rupee Falls To All-Time Low Of 88.50 Against US Dollar

The Indian rupee hit a record low against the US dollar on Tuesday, slipping 18 paise to close at 88.50. This marks a fresh all-time low for the currency, which had settled at 88.32 in the previous session on Monday.

Rupee's trading range for the day is expected to be around 88.15 to 88.50 said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

Bhansali noted that "buying for FTSE outflows and FPIs took the pair to the higher side from a low of 88.1150. FPIs have been constant dollar buyers as they sold Rs 2,900 crores of shares yesterday and persistent headwinds like enhanced US tariffs on Indian goods as well as US Visa fees of $ 100k on H-1B visas has rupee lurking towards the all-time low"

He further added that, "RBI has been the only dollar provider with some small inflows on account of IPOs of Rs 7,500 crores being launched this week but getting absorbed by the large buying of dollars. The RBI has however, limited direct currency intervention, thus allowing greater volatility and possible further declines in rupee which has made new lows against most majors."

Global risk-aversion and trade policy uncertainty has also exacerbated the Rupee’s depreciation, Bhansali said.

Notably, "the Federal Reserve is expected to cut rates by 25 bps at the October 19 meeting, according to data from Prime Market Terminal. Odds are at 89%, while for a hold stand at 11%," says Kunal Sodhani, Head of Treasury, Global Trading Centre, FX & Rates Treasury, Shinhan Bank India.

The Indian rupee's earlier record low was seen in early September when it settled at a record closing low of 88.44 against the US dollar, in line with the weakness in its Asian peers on the back of buying by importers and banks.