RBI Steps In As Rupee Plunges To Record 95.6250, Traders Spot Dollar Sales

The rupee's move to an unprecedented 95.6250 per dollar marks another milestone in its prolonged weakening cycle, driven by a firm greenback, portfolio outflows and elevated import demand. The suspected RBI intervention provided a floor, but the fact that the central bank needed to step in highlights the intensity of selling pressure in early trade.

Record Low Territory

Rupee Hits 95.6250 Intraday

The rupee breached all prior historic lows before settling back to around 95.50, suggesting that while bear pressure is strong, the RBI's presence in the market is preventing a free fall. Even at 95.50, the currency is still down 0.2% on the day, maintaining a softening bias.

RBI's Hand In The Market

Central Bank Suspected Dollar Sales

Traders on the interbank market reported signs consistent with RBI dollar sales, including sudden resistance at lower rupee levels and reduced bid-offer spreads at critical price points. The central bank typically intervenes to smoothen volatility rather than defend a specific level, giving it flexibility to manage the pace of depreciation.

Broader Implications

Import Costs, Inflation And Reserves

A sustained rupee at record lows raises India's import bill significantly, particularly for crude oil, gold and electronics, with potential second-order inflationary effects. Sustained dollar-selling intervention also draws down India's foreign exchange reserves over time, making the pace and scale of RBI action a key variable to watch.

Corporate And Investor Watchpoints

Importers, especially energy companies, airlines and manufacturers with foreign-currency costs, face margin pressure and urgent hedging needs. Exporters gain competitively, but volatility makes forward pricing difficult, while foreign institutional investors may factor in currency risk when recalibrating India allocations.

Rupee Watch Highlights

• Rupee touched a record low of 95.6250 per dollar in early trade
• Last trading around 95.50, down approximately 0.2% on the day
• RBI reportedly selling US dollars to limit volatility and pace of fall
• Import-sensitive sectors face rising costs; exporters see marginal benefit
• Forex reserve drawdown risk increases with sustained intervention

Sources: Reuters interbank FX desk, trader commentary, intraday currency rate feeds