The Indian rupee slumped to an all-time low of 86.65 against the US dollar on Saturday (January 31), breaching the psychologically significant 86-mark.

Earlier in January, it had touched 86.6475.

The decline comes amid global economic uncertainties and fresh trade tariff threats from US President Donald Trump, targeting Canada, Mexico, and China. According to Reuters, the US dollar index strengthened to 108.2, leading to a decline in most Asian currencies.

Traders quoted by Reuters indicated that state-run banks were seen offering dollars, likely on behalf of the Reserve Bank of India (RBI) to cushion the rupee’s fall.

Meanwhile, Bloomberg reported that the RBI injected $5.10 billion into the financial system through a foreign exchange swap auction, aiming to ease a severe liquidity crunch.

This marks the first use of this tool in five years, as part of the RBI’s broader $18 billion liquidity plan to tackle tight domestic money markets. According to Business Standard, the RBI accepted 28 bids, totalling $5.1 billion, with a premium cut-off set at 96.81 paisa, slightly below the prevailing market level.