Rupee slips past ₹89/$, records steepest single-day fall since May
Indian currency falls to a new low on strong dollar demand, foreign fund outflows, and worries over US sanctions
Key reasons for rupee’s free fall
The Indian rupee witnessed sharp losses on Friday and fell to a fresh low of ₹89.49 against the US dollar. This move pushed the currency beyond its earlier support level of ₹88.80, marking a heavy intraday loss of 78 paise from the previous close of ₹88.71 – the biggest one-day slide since May. The sharp drop was triggered as automatic stop-loss orders came into effect after the currency broke key levels.
Currency traders attributed the fall to heightened dollar purchases and relentless selling pressure from overseas investors. Offshore markets, too, were signaling weakness as the rupee was spotted close to ₹ 89.86. Market sentiment only turned for the worse after the US State Department reportedly slapped sanctions on some Indian firms and persons associated with facilitating Iranian crude oil transactions.
Although the Reserve Bank of India had said it does not defend any fixed exchange rate, the central bank intervened when the rupee breached the ₹89 level. A strong US dollar, further bolstered by good American jobs data and expectations that interest rate cuts would be delayed, contributed to the rupee’s slide.
Analysts said that the currency may weaken to the ₹90.40–₹91 range, where immediate support is around ₹88.45. Higher US tariffs on Indian goods since late August, sluggish trade activity, and an expanding merchandise trade deficit remain key pressures on the rupee.
Overall, the steep decline reflects a combination of global uncertainties and domestic economic pressures. The direction of the rupee in the coming weeks will depend on how these factors evolve and the extent of policy intervention.
