MUMBAI: The Indian rupee declined to its all-time low on Thursday, pressured by dollar bids in the non-deliverable forwards (NDF) market and from importers while intervention by the central bank kept a lid on losses, traders said.

The rupee weakened to a low of 84.88 to the U.S. dollar, down 0.04% on the day. The currency was quoted at 84.8750 at 10:00 a.m. IST.

State-run banks were spotted offering dollars, most likely on behalf of the Reserve Bank of India (RBI), traders said.

Heightened dollar demand in the NDF market alongside strong dollar buying by local importers, including oil companies, have weighed on the rupee in recent sessions, a trader at a state-run bank said.

The prospect of a weaker yuan presents another headwind to Asian currencies after Reuters reported on Wednesday that China is considering allowing a weaker yuan to weather the tariff risks under the incoming Donald Trump administration.

Indian rupee slips to record low pressured by NDF dollar bids; RBI likely steps in

On the day, Asian currencies were mixed while the offshore Chinese yuan rose 0.1% to 7.26 after declining to a low of 7.29 in the previous session.

The dollar index was steady at 106.5 after U.S. inflation data prompted investors to nearly fully price in a December rate cut by the Federal Reserve. The heightened expectations did little to blunt the dollar’s stride.

“We look for another 25bp Fed cut next week, but new Fed forecasts should show a shallower series of cuts in 2025,” ING Bank said in a note. A shallower easing cycle by the Fed is likely to support the dollar.

Dollar-rupee forward premiums rose on the back of heightened expectations of a U.S. rate cut, with the 1-year implied yield up 7 basis points at 2.22%, its highest in December so far.