The Indian rupee is poised to open at fresh record lows as persistent flow imbalances combine with a deteriorating global risk environment to weigh heavily on the currency.

According to one-month non-deliverable forward (NDF) pricing, USD/INR is expected to begin trading in the 90.80–90.85 range, extending losses after the rupee closed at 90.73 on Monday. The currency hit a new all-time low of 90.7875 during the previous session, marking its third consecutive day of record weakness.

Market participants say the latest decline is driven more by entrenched flow dynamics than panic. Bankers highlight a sustained mismatch between dollar demand and supply. In particular, fixing-related dollar buying—possibly linked to NDF maturities and portfolio outflows—has emerged as a recurring source of pressure. Additional demand from state-owned enterprises has also tightened onshore liquidity.

Importer hedging demand remains consistently strong due to ongoing concerns about further rupee depreciation. Meanwhile, exporter selling has been subdued, as many exporters are reluctant to hedge at current levels, preferring to wait for better rates. This imbalance leaves the rupee vulnerable even to modest increases in dollar demand.

Portfolio flows have played a central role in the currency’s weakness. Continuous foreign outflows from India’s equity and debt markets have outweighed the country’s longer-term structural positives, including solid growth prospects and improving macro fundamentals. In the short term, these strengths have provided limited protection against global risk aversion and a firm US dollar.

Traders note that the current phase of rupee weakness appears orderly and flow-driven rather than the result of speculative capitulation. Volatility remains contained, suggesting markets are adjusting incrementally instead of undergoing disorderly repricing of risk.

Until there is a meaningful shift in portfolio flows, an improvement in global risk sentiment, or a clear positive catalyst on the trade front, the rupee is likely to remain under pressure. Without these triggers, fresh record lows cannot be ruled out in the near term.

Original Source: Eamonn Sheridan of investinglive.com