The Indian rupee declined to a historic low on Wednesday, influenced by growing expectations that the Reserve Bank of India (RBI) may announce an interest rate cut later this week. Increased demand for the U.S. dollar from importers further added to the currency’s weakness.
The rupee depreciated to 87.35 per U.S. dollar, surpassing its previous record low of 87.28, which was reached on Monday. The currency registered a nearly 0.3% drop for the day.
Despite a weaker U.S. dollar supporting most Asian currencies, the rupee lagged behind as traders factored in the possibility of the RBI’s first rate cut in nearly five years. Meanwhile, the U.S. dollar index dipped 0.3%, settling at 107.7.
Market participants noted that the rupee faced additional pressure due to ongoing foreign portfolio outflows. So far in 2025, overseas investors have offloaded approximately $8 billion in Indian stocks and bonds. Although state-run banks intervened intermittently with dollar sales, the impact was limited, preventing a sharper fall.
