At the interbank foreign exchange market, the rupee opened at 96.36 against the dollar.
Mumbai: The Indian rupee on Wednesday hit a fresh all-time intraday low of 96.96 per dollar as persistent dollar demand driven by geopolitical uncertainty and trade imbalances continued to weigh heavily on the currency. The RBI's interventions and the government's recent policy measures have provided limited relief, with authorities reportedly weighing additional steps to arrest the decline.
At the interbank foreign exchange market, the rupee opened at 96.36 against the dollar, it made a high of 96.96 and a low of 96.71 before closing the day at 96.82 per dollar, a fall of 29 paise compared to its previous close of 96.61.
Vinay Rajani, Senior Technical Research Analyst – Prime Research, HDFC Securities said, “The rupee closed 29 paise weaker at 96.83 against the dollar, marking a fresh all‑time low, with today’s intraday low at 96.9650. The sharp rupee weakness likely reflects persistent FII outflows, elevated crude prices, and safe‑haven demand for the dollar amid global risk‑off sentiment.”
The rupee has weakened more than 6 per cent since the onset of the US-Iran war in late February that pushed up crude prices at $ 108.76 per barrel. A persistently elevated rupee continues to compound pressure on India's already strained import bill and inflation outlook, with rising energy import costs adding a further layer of strain.
Meanwhile, the Reserve Bank of India during the day announced that it will conduct a dollar/rupee buy/sell swap auction of $5 billion for a tenor of three years on May 26. The swap followed a review of current and evolving liquidity conditions, the central bank said, and comes as it continues to defend a rapidly weakening rupee by selling dollars from forex reserves.
According to the release, the swap is in the nature of a "simple buy/sell foreign exchange swap" from the Reserve Bank side, wherein a bank shall sell US dollars to the Reserve Bank and simultaneously agree to buy the same amount of US dollars at the end of the swap period.
According to Reuters, the RBI has sold dollars at an estimated pace of $1 billion per day in recent sessions. RBI uses the swap mechanism to inject rupee liquidity into the banking system while simultaneously managing foreign exchange reserves. India’s banking system liquidity remains in surplus but has fallen to Rs 1.51 lakh crore which is around 0.6 per cent of deposits. The RBI is also due to release its dividend to the government this week which is expected to be higher than ₹3 lakh crore. This amount too in a calibrated manner comes to the banking system liquidity in form of government spending.
