Rupee hits record low of 87.35 vs USD on rate cut expectations

The Indian rupee weakened to its all-time low on Wednesday, pressured by expectations that the Reserve Bank of India will cut interest rates later this week, while dollar demand from importers also weighed.

The rupee fell to 87.35 against the U.S. dollar, eclipsing its previous lifetime low of 87.28 hit on Monday and was down nearly 0.3% on the day.

While a softer dollar benefited most Asian currencies on Wednesday, the rupee was an underperformer as traders positioned for the first RBI rate cut in nearly five years. The dollar index was down 0.3% at 107.7.

Dollar demand from importers also weighed on the rupee, while intermittent dollar sales from state-run banks helped keep a lid on losses, traders said.

In addition to expectations of a rate cut, the rupee has also remained under pressure on account of persistent foreign portfolio outflows. Overseas investors have net sold $8 billion worth of local stocks and bonds in 2025 so far.