The rupee is falling after a three-day rally on demand for the dollar

Mumbai: The Indian rupee fell on Monday after a three-day rally against the US dollar, although it did not cross the 90 mark. The decline was driven by demand for dollars from local companies and pressure from the non-deliverable futures market, which offset recent intervention-led gains. The rupee closed at 89.65 per dollar, down 0.4% from 89.27 last Friday. During the session, it traded within a narrow range of 89.45 to 89.72.

“The INR rose sharply against the USD last week due to aggressive currency intervention by the RBI along with FPI (foreign portfolio investors) inflows into equities,” said a research report by ICICI Bank. “However, higher oil prices have partially offset gains in today’s trading and will be a driving force for the pair in the near term.”

Heavy interventions by the Reserve Bank of India on Friday aimed to curb speculation and help the rupee recover from 90.10-90.20 to 89.30. The currency gained 1.3% last week, marking its best monthly performance.

Since the start of 2025, the rupee has fallen by almost 6%, hitting a record low of 90.70 on December 15. “The INR’s underperformance in 2025 had less to do with India’s domestic fundamentals and more to do with US politics and trade uncertainties, which increased the risk premium on Indian assets,” said Philip Wee, senior forex strategist at DBS Bank.

“Our base case sees USD/INR in the lower half of an ascending price channel, towards 89.5-92.8 by the end of 2026.”