Currency watch: Rupee slips to record closing low of 88.35 vs US dollar; strong dollar index, crude gains add pressure

The rupee closed at a fresh all-time low of 88.35 against the US dollar on Thursday, tumbling 24 paise amid sustained tariff tensions between India and the US, foreign fund outflows, and rising crude oil prices.Forex dealers said a stronger dollar ahead of US inflation data further weighed on the Indian unit, which continues to trade under pressure despite intermittent signs of recovery.At the interbank foreign exchange, the rupee opened at 88.11 and hit its intraday lifetime low of 88.49 against the greenback before settling at 88.35 — down 24 paise from its previous close, PTI reported. On Wednesday, the currency had edged up 4 paise to 88.11.

The earlier record closing was 88.18 on September 1.“The Indian rupee is trading near historic lows, facing pressure from strong import dollar demand, external tariff concerns and market anticipation of US inflation data and Federal Reserve policy,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.Bhansali added that the dollar index was hovering close to 98, while Brent oil prices had also strengthened, keeping dollar bids high.

“The premiums were also indicating higher due to the increase in interest rate differential between India and the US in the last three days. The rupee is expected to be in the range of 88.25 to 88.75 on Friday,” he said.The dollar index rose 0.22 per cent to 97.99. Brent crude, the global oil benchmark, was trading 0.25 per cent lower at $67.32 a barrel in futures trade.“We expect the rupee to trade with a negative bias amid a recovery in the US dollar index and persistent FII outflows.

Dollar demand from importers and ongoing tariff issues between India and the US may also pressurise the rupee. However, positive domestic equities and renewed negotiations between India and the US may support the currency at lower levels,” said Anuj Choudhary, Research Analyst, Currency and Commodities, Mirae Asset ShareKhan.On the equities front, the Sensex climbed 123.58 points to close at 81,548.73, while the Nifty gained 32.40 points to 25,005.50.

Foreign Institutional Investors (FIIs) sold shares worth Rs 3,472.37 crore, according to exchange data.Meanwhile, Prime Minister Narendra Modi said on Wednesday that India and the US are “natural partners” and that teams from both sides are working to conclude a bilateral trade deal. His remarks came in response to President Donald Trump’s statement that efforts are underway to address “trade barriers” between the two countries.The social media exchange between the leaders is being seen as an attempt to reset strained ties after Trump recently doubled tariffs on Indian goods, escalating friction between the two nations.