Indian Rupee Opens At 89.88 Against Dollar After 0.6% Weekly Decline
The Indian rupee started the current trading session at 89.88 against the dollar, showing slight improvement from the previous close of 89.85. This comes after the currency posted a 0.6% weekly decline despite aggressive central bank intervention, with corporate dollar demand and NDF market activity continuing to pressure the currency despite substantial foreign exchange reserves of ₹689.00 billion.
*this image is generated using AI for illustrative purposes only.
The Indian rupee opened at 89.88 per dollar in the current trading session, showing a slight improvement from the previous close of 89.85. This opening level comes after the currency posted a 0.6% weekly decline despite aggressive central bank intervention that had initially provided support. The rupee continues to face sustained pressure from corporate dollar demand and activity in the non-deliverable forwards market.
Current Trading Session and Weekly Performance
The rupee's current opening at 89.88 represents a marginal gain from Friday's closing level of 89.85, though the currency remains under pressure from the broader weekly decline. The 0.6% weekly decline marked a reversal from the previous week's gains of more than 1%, when the central bank had stepped in to shore up the currency from record lows.
| Trading Metrics: | Current Level | Previous Close | Weekly Performance |
|---|---|---|---|
| Opening Level: | 89.88 | 89.85 | Slight improvement |
| Weekly Change: | - | - | -0.60% |
| Previous Week: | - | - | +1.00% |
State-run banks had provided crucial support during Friday's session by conducting dollar sales around the 89.90 level, near the day's low, which helped the currency avoid deeper losses according to market traders.
Market Pressures and Intervention Impact
The rupee's recent performance highlights the persistent challenges from multiple market forces despite the RBI's aggressive intervention. Corporate dollar demand and steady activity in the non-deliverable forwards market continued to chip away at the intervention-fueled gains that had initially supported the currency.
Traders noted that a few maturing positions in the NDF market scheduled for the coming period could add additional pressure and potentially pull the rupee back below the 90.50 level. The currency had previously touched record lows before the central bank's intervention provided temporary relief.
Forward Market and Reserve Position
Dollar-rupee forward premiums continued their retreat, with the 1-year implied yield declining approximately 10 basis points to 2.74%. This movement was attributed to traders cutting stop-losses on paid positions, which amplified the fall in premiums following the RBI's announcement of an FX swap that eased concerns over excess dollar liquidity in the system.
| Forward Market Metrics: | Current Level | Change |
|---|---|---|
| 1-Year Implied Yield: | 2.74% | -10 basis points |
| FX Reserves: | ₹689.00 billion | As of December 12 |
India's foreign exchange reserves stood at nearly ₹689.00 billion as of December 12, according to central bank data, providing substantial ammunition for future interventions if required. ANZ analysts expect further gradual depreciation until a favorable trade deal with the U.S. potentially boosts the currency.
Global Currency Context
In broader markets, Asian currencies remained mostly range-bound while the dollar index traded near a two-month low and was positioned to log its fourth weekly decline in the last five weeks. This global dollar weakness provided some backdrop support for emerging market currencies, though domestic factors continued to weigh on the rupee's performance.
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