Oil, gold importers' demand for dollar drags rupee to record low of 88.44 vs USD

Indian Rupee

Indian rupee ended record low on September 11 driven by strong demand for dollars from oil and gold importers for hedging purpose, tariff-related uncertainty, and consistent selling by foreign investors in Indian equites, currency experts said.

Experts added that there were no signs of intervention by the Reserve Bank of India (RBI) in the spot market as it allowed the domestic currency to trade with market flows.

The local currency ended at 88.44 against the US dollar, as compared to 88.1288 at open and 88.1013 at previous close against the greenback. During the afternoon trade rupee touched a record low of 88.4563 against the US dollar.

“There were buying of dollars from the oil and gold importers from the banks,” said Dilip Parmar, a foreign exchange analyst at HDFC Securities.

Further, Amit Pabari, managing director at CR Forex Advisors, said Indian rupee slipped to a new all-time low of 88.45 against the U.S. dollar, with the move likely driven by large import payments, possibly for defence or oil. “The RBI has so far remained silent, with no visible intervention to cushion the decline.”

The absence of RBI comes at a sensitive time when the rupee is already under heavy pressure from the impact of U.S. tariffs on Indian exports, which continue to weigh on sentiment and add to concerns about the country’s external position.

Indian rupee has been under pressure since the imposition of the tariffs by the US President Donald Trump. The currency further depreciated after the tariffs were increased to 50 percent.

Apart from tariffs, the consistent outflows from the foreign portfolio investors (FPI) in equities is also fueling the depreciation of currency. As per NSDL data, FPIs remained net seller of Rs 17,741 crore in July, Rs 34,993 crore in August, and Rs 7,368 crore so far in September.

Rupee’s weakness has come on a day when Asian peers too have been lower, despite the expectations that the US Federal Reserve will likely cut rates next week. Asian currencies logged small losses on September 11, with the South Korean won down 0.31 percent, Japanese Yen was down 0.34 percent, Singapore Dollar was down by 0.19 percent, and Philippine peso fell 0.13 percent, according to the Bloomberg data.

Trump's recent steep tariffs have hurt India's export outlook, making the path ahead for currency less clear. To offer support to exporters and to spur domestic consumption, Prime Minister Modi recently rolled out a GST cut.

Both Trump and Modi are also hopeful of continued negotiations to resolve pending trade issues.