RBI Intervenes as Rupee Hits Lifetime Low of 88.82

The Reserve Bank of India intervened in the foreign exchange market on October 6, 2025, to support the rupee as it slid to a lifetime low of 88.82 against the U.S. dollar. The central bank utilized state-run banks to offer dollars and conducted buy-sell swaps to establish a floor around the 88.80 mark, countering persistent demand from local importers. The currency eventually closed nearly unchanged at 88.7725 on Tuesday.

The decline was driven by a strengthening U.S. dollar index, rising Brent crude oil prices, and a drop in India's foreign exchange reserves to $700.236 billion for the week ending September 26. Despite this volatility, the domestic equity markets saw gains, with the Sensex rising 582.95 points and the Nifty rallying 183.40 points. Analysts noted that anticipated inflows from three major IPOs—WeWork, Tata Capital, and LG Electronics India Ltd—totaling approximately ₹31,000 crores, could provide additional support for the currency.

Diplomatic tensions added to the economic pressure. External Affairs Minister S. Jaishankar stated on October 5 that while an understanding with the U.S. is necessary, any trade agreement must respect India's "red lines," noting that the two nations have not yet reached a "landing ground" on discussions. This follows 13 months of market underperformance driven by high valuations and foreign institutional investor outflows.