The Indian rupee slipped to a fresh all-time low on Tuesday, weighed down by the recent US visa fee hike, subdued foreign equity flows, and a rise in hedging activity.
The currency fell to 88.4850 against
the U.S. dollar, breaching its previous record of 88.4550 touched earlier this month. Traders noted that the Reserve Bank of India (RBI) likely stepped in through state-run banks after the rupee hit the new low.
The decline came despite the dollar easing slightly in Asian trade. The one-month non-deliverable forward (NDF) market had already signalled a weaker opening, with contracts pricing the rupee around 88.31–88.32 levels.
Pressure from US policy moves
The rupee’s weakness was attributed largely to Washington’s protectionist stance. The U.S. has imposed higher tariffs on Indian exports compared with other Asian peers, alongside raising H-1B visa fees for new applicants.
Market participants warned that the visa fee hike could hurt India’s IT services sector and dampen remittance inflows from the U.S., which contributes nearly a third of India’s total remittances. DBS Bank said India remains the world’s largest remittance recipient but cautioned that “steady tightening in work-related visas in the U.S. might impact inflows” over time.
A Mumbai-based currency trader added that the rupee “is likely to remain one of the weaker Asian currencies in the near term,” although RBI intervention should help curb excessive volatility.
Dollar softens, Fed in focus
Meanwhile, the U.S. dollar edged lower on Tuesday as investors assessed hawkish commentary from Federal Reserve officials. The Fed had cut interest rates last week and signalled two more reductions this year. Markets are now factoring in a strong chance of another cut in October, even as policymakers maintain a cautious outlook on inflation and growth.
