Friday, 12 Sep, 2025
By: Anshul Vipat
Late last month, the rupee had touched a historic low of Rs 80 per dollar
After recovering a bit, the Indian rupee again slumped to 79.80 against the US dollar this week. The rupee was trading at a session-high of 79.7100 per U.S. dollar this week, compared with 79.8625 in the previous session. Late last month, the rupee had touched a historic low of Rs 80 per dollar. According to global estimates, the domestic currency is now expected to trade in the range of 79.15-79.75/$ this fortnight due to positive global cues.
Signs of recovery
Despite broader dollar index surging to 109 from 105 in the last two weeks, the rupee has avoided reaching a new record low. A combination of foreign equity inflows and RBI intervention bets has helped the rupee's steady run. Foreign institutional investors (FIIs) were net buyers in the capital market purchasing Indian shares worth ₹ 2,320.61 crore, as per the latest exchange data.
Intrestingly, the rupee has remained constant despite an increase in global oil prices. After a slump decline, global crude oil prices advanced 1.58 per cent to above the $100/barrel mark following Saudi officials showing willingness to defend prices via an OPEC+ production cut if necessary. Last week, the brent crude oil prices had seen a 10 percent decline in the past few days. Even a slight fluctuation in crude oil prices impact India which imports close to 80 percent of its domestic crude oil demand.
The road ahead
The RBI has been regularly intervening to arrest the rupee slump and continue to ease money flow in the market. Last week, the central had raised rates by 50 basis points. Before this, the central bank had raised rates by 90 basis points in two moves to temper price gains. It has also allowed more access to rupee debt by foreign portfolio investors (FPI), higher borrowing limits for top-grade firms via External Commercial Borrowings (ECBs) and easier norms for banks to raise dollar deposits.
While the central bank may continue taking such measures, there is no reason to hit the panic button. Several economic indicators are pointing towards a slow but steady recovery. Even as the world continues to battle inflation, we saw a decline in inflation rates from 7.79 per cent in April to 6.71 percent in July. Industrial production index also showed a sharp recovery after a slump first quarter. This downward trend can sustain, given the recent sharp decline in commodity prices. Despite a cut in GDP growth by IMF, India continues to remain one of the fastest growing economy in the world.
