INR: A record low is reached by the Indian rupee.

As expiring non-deliverable contracts and currency futures increased demand for dollars, the Indian rupee (INR) plunged to its lowest level ever on Friday. Meanwhile, importers panicked and bought dollars.

Before the central bank’s intervention helped to reduce sharp losses, traders said the Indian rupee fell to an all-time low of 85.8075 versus the US dollar.

The rupee saw its biggest one-day decline since June 4, when the unexpected results of India’s general elections shocked markets, closing at 85.5325, down 0.3% for the day. For the eighth consecutive week, the rupee dropped by around 0.3%.

A hawkish shift in the Federal Reserve’s policy stance and expectations around the policies of U.S. President-elect Donald Trump have impacted the rupee combined with broad-based currency strength due to worries over India’s slowing economy and widening trade imbalance.

For eight straight sessions, the Indian rupee has fallen to all-time lows.

A line graph illustrating the dollar-rupee currency pair’s price movement
According to dealers, the rupee suffered on the day from dollar bids associated with the December currency futures contract’s expiration and maturing holdings in the non-deliverable forwards market.
According to dealers, the rupee fell precipitously earlier in the session due to the central bank’s absence in the face of strong dollar bids, which caused importers to engage in panic dollar purchasing.

According to dealers, the rupee fell precipitously earlier in the session due to the central bank’s absence in the face of strong dollar bids, which caused importers to engage in panic dollar purchasing.

However, a trader at a private bank claimed that the rupee recovered because the Reserve Bank of India (RBI) “stepped in strongly” towards the end of the session.

According to Abhishek Goenka, CEO of FX advice company IFA Global, the RBI “seems keen to let the rupee adjust and let the overvaluation correct against peers.”