The under-pressure Indian
rupee is poised to open higher on Tuesday after the dollar
slumped to a four-month low, hit by the rally in the Japanese
yen and unease over President Donald Trump’s erratic
policymaking.
The 1-month non-deliverable forward indicated the rupee
will open in the 91.68-91.72 range versus the US dollar, having settled at 91.94 on Friday. Indian financial
markets were shut on Monday for a holiday.
The rupee fell 1.18 per cent last week, taking it near the 92.00 per
dollar handle for the first time. The move has coincided with
persistent equity outflows, now at nearly $4 billion for
January.
Traders pointed out that the pace of the decline suggests
pressures are not limited to portfolio flows alone, particularly
with bullion imports appearing to have picked up.
The rupee’s weakness has built up depreciation expectations,
in turn amplifying dollar demand.
Corporates have stepped up hedging activity, while
speculators added to long-dollar positions, creating a feedback
loop that has kept the rupee on the back foot, bankers said.
The rupee’s slide has come despite the Reserve Bank of India
stepping in regularly to lean against the move, according to
traders. Market participants say the central bank is supplying
dollars at various levels rather than defending any single
level.
“The RBI has the capacity to intervene — as seen in prior
episodes,” said Abhishek Goenka, founder and CEO of
India Forex Advisors.
“Its recent restraint suggests a clear policy choice:
support growth over aggressively defending the currency.”
Dollar slide
The rupee is set to find support at the open from the dollar
index, which is languishing near a four-month low on the back of
a rally in the yen, a looming US federal shutdown and
President Donald Trump’s erratic policymaking.
Meanwhile, the Reserve Bank of India on Friday unveiled
measures to inject more than $23 billion of liquidity into the
banking system, including a $10 billion buy/sell FX swaps.
And in a welcome development for rupee, India and
European Union wrapped up talks for a landmark trade deal amid strained US ties.
Published on January 27, 2026