The Indian rupee weakened to an all-time low on Friday, hurt by persistently strong dollar demand in the non-deliverable forwards (NDF) market, while likely intervention by the Reserve Bank of India (RBI) capped the currency's losses.

The Indian rupee fell to a lifetime low of 85.50 against the U.S. dollar due to high dollar demand from maturing non-deliverable forwards and currency futures. Increased activity from importers also contributed to the drop.

India’s import bill is expected to increase by about $15 billion due to INR depreciation impact, says Global Trade Research Initiative (GTRI).

The rupee witnessed its biggest intraday fall in two years before cutting some losses as it came under pressure due to month-end dollar demand from importers, coupled with maturing non-deliverable forwards (NDF) and currency futures, resulting in a surge in dollar demand.

The Indian rupee weakened to its all-time low on Wednesday, pressured by heightened dollar bids in the non-deliverable forwards (NDF) market, while likely intervention by the Reserve Bank of India (RBI) helped limit losses,

The rupee dropped to the lowest value ever for the first time as the depreciation, driven by a consistent nine-day demand for the dollar and end-of-month currency contract expiries.

Indian Rupee hits record low at 85.81 per dollar, driven by RBI actions, market activity, and speculation, experts say.

According to analysts, the Reserve Bank's stance to hold on to its dollar payments in short-term forward contracts added to the shortage of greenback, with importers rushing to meet their month-end payment obligations.