Rupee opens marginally higher at 88.74 against US dollar: What's driving the move

The Indian rupee opened slightly stronger at 88.74 per US dollar on Monday (October 6), compared to Friday’s close of 88.77, aided by anticipated inflows from upcoming initial public offerings (IPOs), currency dealers said.

The local unit had hit record low of 88.80 last week.

Traders said state-run banks were offering dollars in early trade, likely on behalf of the Reserve Bank of India (RBI), which has been actively intervening near the 88.80 level to limit depreciation.

The 1-month non-deliverable forward (NDF) pointed to an opening range of 88.74–88.78, suggesting limited movement amid persistent dollar demand from importers. Exporters, however, were holding back on hedging, expecting further weakness in the currency.

“The mismatch in hedging flows has become quite pronounced. Importers are aggressively buying dollars, while exporters are waiting for better levels,” a foreign exchange salesperson at a private bank said.

Foreign portfolio flows have been negative, with foreign investors withdrawing $2.7 billion from Indian equities in September, partly after the US increased its H-1B visa fee. However, traders expect some near-term support from equity issuance-related inflows.

• Tata Capital is launching its $1.75 billion share sale on October 6


• LG Electronics India opens its $1.3 billion IPO on October 7

Both are expected to attract foreign investor participation, market participants said.

On the other hand, the dollar index was flat around 98, while Asian currencies traded mixed.

The Japanese yen weakened 1.7%, sliding to multi-year lows after Sanae Takaichi — seen as fiscally and monetarily accommodative — won the ruling party leadership contest, clearing the path to become Japan’s first woman prime minister.

Despite global currency weakness, analysts expect the RBI to continue allowing only a controlled depreciation while preventing sharp volatility.

-With agencies inputs