Rupee falls to record low of 88.75 against US dollar

Last week, US President Donald Trump announced a sharp increase in the H-1B visa application fee from $1,000 to $100,000 per applicant. The revised fee is applicable only to new applications. The move is likely to result in a slowdown in remittance growth and curtail service exports to the US, analysts said.

“USDINR is trading at 88.75, marking yet another record high as concerns over potential H1B visa changes and trade tensions weigh on sentiment,” said Anindya Banerjee, head commodity and currency, Kotak Securities.

The Reserve Bank of India (RBI) seems comfortable letting the market set prices more freely, with a weaker rupee acting as a buffer in the trade war backdrop, he said.

The rupee is undergoing a steady depreciation, marking its second consecutive day of decline and positioned it as the weakest performer among Asian currencies.

“This downturn is attributed to a persistent bearish bet by the traders, which is being driven by external worries and a continued outflow of foreign funds. Despite strong domestic high-frequency data, these external pressures are exerting downward force on the local currency,” said Dilip Parmar, research analyst, HDFC Securities.

Over the last three months, foreign investors net sold Rs 61,522 crore of domestic equities due to tariff-related uncertainties.

Outlook

Looking ahead, the rupee is expected to maintain a weaker bias with a possible mild upside, supported by firm USD sentiment and possible FPI inflows, said Dipti Chitale, CEO, Mecklai Financial Services Pvt Ltd.

Domestic factors such as the anticipated 25 basis points (bps) cut in the repo rate by the RBI in its upcoming monetary policy and the outcome of trade talks between Commerce Minister Piyush Goyal and US Trade Representative Jamieson Greer will be key factors to watch for near-term direction.

“In the absence of supportive global flows, the rupee is likely to stay under pressure, with RBI interventions providing interim stability,” she said.

Near term, spot USDINR could move within the 88.00–89.50 range, said Banerjee of Kotak Securities.