The Indian rupee appreciated marginally to 85.4750 against the U.S. dollar on Monday, up from 85.5325 in the previous session, supported by gains in Asian currencies. However, very-near-tenor dollar-rupee swap rates experienced a significant spike due to year-end adjustments, tightened rupee liquidity, and the absence of Reserve Bank of India (RBI) intervention. The tomorrow-next dollar-rupee swap rate surged to 14 paisa, and the overnight swap rate increased to 3 paisa amid market concerns. Last week, the rupee hit an all-time low of 85.8075, driven by high dollar demand, but strong RBI intervention helped stabilize the currency. Factors such as substantial portfolio outflows, slowing economic growth, and a widening trade deficit have pressured the rupee this quarter. Foreign portfolio investors have sold over $10 billion in local stocks and bonds during this period. Despite these challenges, the rupee has outperformed most Asian currencies, declining 1.8% compared to peers' drops ranging from 2.9% to 11.2%. Analysts expect the rupee to trade within the 85.20-85.80 range in the near term.
