Rupee settles on a flat note near all-time low at 84.84 against US dollar

Rupee ended Wednesday’s session on a flat note, gaining just 1 paisa to close at 84.84 (provisional) against the US dollar, slightly above its all-time low. During intraday trade, the rupee touched a record low of 84.87 amid rising expectations of a policy shift under new Reserve Bank of India (RBI) Governor Sanjay Malhotra.

Forex market participants noted that Malhotra’s appointment has heightened speculation of a possible rate cut in the RBI’s February policy meeting, particularly as the Indian economy navigates the dual challenges of high inflation and slowing growth. Malhotra, who replaces Shaktikanta Das, is known for advocating collaboration between the RBI and government to address inflation.

Early in the session, the rupee was under pressure due to a rebound in the US dollar index, which gained 0.25 per cent to 106.66. Rising global crude oil prices also weighed on the currency. However, positive domestic equity markets, foreign institutional investor (FII) inflows, and reports of RBI intervention offered support.

At the interbank forex market, the USD/INR pair traded in a tight range of 84.65–84.87. Market analyst Anuj Choudhary of Mirae Asset Sharekhan expects the rupee to remain under pressure, citing strong dollar momentum and higher crude prices but noted that continued FII inflows and further RBI intervention could limit losses.

The domestic equity markets also provided a supportive backdrop, with the Sensex gaining 16.09 points (0.02 per cent) to close at 81,526.14, and the Nifty up by 31.75 points (0.13 per cent) to 24,641.80. On Tuesday, FIIs were net buyers, investing Rs 1,285.96 crore in the capital markets.

Meanwhile, Brent crude prices rose 0.93 per cent to USD 72.86 per barrel, adding to global inflationary pressures. Investors are now eyeing upcoming US inflation data, which could influence Federal Reserve policy and impact forex markets globally.

The rupee’s near-term trajectory remains tied to global monetary policies and domestic inflation outcomes. Analysts anticipate USD/INR to trade between 84.65 and 85.10 in the coming sessions.