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Informist, Friday, Sept. 26, 2025

By Pratiksha

NEW DELHI – The Reserve Bank of India has taken its defence of the rupee up several notches in the wake of US President Donald Trump hiking H-1B visa fees and the uncertainty related to India-US trade deal. The central bank is said to have sold almost $5 billion in the last two days to prevent a sharp fall in the rupee, four currency dealers said.

"RBI seems to be very, very persistent with their protection of the rupee now. $5-$6 billion have been spent easily in the last few days," a dealer at a foreign bank said. The Indian currency has come under extreme downward pressure after the US imposed a $100,000-fee on new H-1B visas, which weighed on India's information technology services sector and poses a risk to remittances into India. The Indian unit fell to a record low of 88.7975 a dollar on Tuesday. So far in September, the domestic currency has depreciated 0.6% against the dollar.  

 

The visa fee hike also led to uncertainty among traders about a breakthrough in India-US trade negotiations, according to dealers. The US has slapped an additional 25% punitive tariff on Indian goods, on top of a 25% reciprocal tariff, citing New Delhi's continued purchases of Russian crude oil. The two sides have re-started negotiations on a bilateral trade agreement and Commerce Minister Piyush Goyal earlier this month said the first tranche of the deal could be signed by November. Meanwhile, 

continuing with his tariff salvo, Trump Friday announced a new round of tariffs, including a 100% duty on any branded or patented pharmaceutical products.

 

The RBI has not only stepped up its intervention in the spot market recently, but also marked its strong presence in the offshore non-deliverable forwards market, an intervention route used actively under former RBI governor Shaktikanta Das. The apex bank has been intervening in the offshore NDF market a few minutes before the spot market opening in the last few days, including on Friday, to support the Indian currency, dealers said. "$1.0 billion-$1.5 billion average (sales) seem to have become a new normal in the last few days," a dealer at a private sector bank said. "Offshore volumes have also picked up quite a bit."

 

Most dealers expect the central bank to continue providing support to the Indian unit and only allow a slow depreciation going ahead as it has ample ammunition to support the local unit. India's foreign exchange reserves were at $702.97 billion as of Sept. 12, its highest level in a year and just shy of record high of $704.89 billion. "The tariff story may go on for a while but RBI seems to be hell-bent on not hurting the rupee much," a dealer at a state-owned bank said. "I think 89.00 will happen sooner or later but it really depends on them. And looking at the current actions, they don't seem to be willing to allow it."  End

 

US$1 = INR 88.72

 

Edited by Vandana Hingorani

 

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