Indian rupee falls most in a month as traders cut long bets, importers buy dollars

25/11/2025 02:01 AST

The Indian rupee logged its worst day in a month on Monday as a drop below the 88 per U.S. dollar mark spurred a flight out of long wagers on the currency, while persistent dollar demand from importers also weighed.

The rupee closed at 88.2450 against the U.S. dollar, down 0.4% on the day, marking its steepest one-day fall since September 23.

Frequent interventions by the Reserve Bank of India had helped the rupee hold above the 88 mark last week, but traders also pointed to an easing of that defence on Monday. While state-run banks were spotted offering dollars on the day, the activity was not clustered around any specific level, a trader at a foreign bank said.

There was "lots of short covering (on USD/INR) after it rose past 88," which prompted the sharp move, the trader added. Another trader at a state-run bank, meanwhile, pointed to dollar demand from importers, including local oil companies.

Despite the day's fall, the rupee has outperformed most of its regional peers in October after heavy intervention by the central bank earlier in the month helped shore it up from the brink of its all-time low.

Analysts at BofA Global Research hold a neutral view on the rupee. Trade uncertainty, including around services, weighs on exports and flows, despite the appealing valuation and weaker USD trend in the final quarter of 2025, they said in a note.

The rupee's 40-currency real effective exchange rate (REER), a gauge of its competitiveness, fell to 97.65 in September, the lowest in 7 years. A REER below 100 points to undervaluation.

Elsewhere, the dollar index was steady at 98.8 while the offshore Chinese yuan rose to a one-month peak on signs of progress in trade talks between the U.S. and China. Meanwhile as far as India-U.S. talks go, a senior Indian government official said last week a bilateral trade deal with Washington was "very near."

Reuters