The Indian Rupee slipped slightly on Wednesday as attention stayed on US tariffs, while near-term implied volatility fell to multi-month lows, suggesting traders expect limited downside risk for the currency.

At the time of writing, the Rupee was trading at 88.1250 per US Dollar, down from 88.1025 on Tuesday and just 0.2% below last Friday’s record low of 88.36.

In late August, the Rupee dipped past 88 per Dollar for the first time, raising expectations of a sharp decline, an outcome that has yet to materialise.

The spike in implied volatility following the drop has also dissipated. Normally, when a currency approaches record lows, traders anticipate bigger swings, causing implied volatility to increase, Reuters news agency reports.

The 10-day realised volatility has remained under 4%, and in line with this relative stability, one-month implied volatility has fallen to levels not seen since March.

Bankers note that the muted near-term swing expectations, even as the Rupee hovers near record lows, partly reflect the stabilising impact of interventions by the Reserve Bank of India (RBI).

Corporates have been consistently selling volatility, and the RBI has done an excellent job managing the spot market, which is why implied volatility continues to decline, according to an FX derivatives trader at a private sector bank.

Rupee traders are closely watching US-India trade relations, a major factor influencing the currency’s short-term movement.

On this front, signals have been mixed.

US President Donald Trump stated on Truth Social that Washington and New Delhi are continuing negotiations to tackle trade barriers, expressing confidence in reaching a successful outcome.

At the same time, he urged the European Union to impose tariffs of up to 100% on India over its Russian oil purchases, a step that could place additional pressure on the Rupee.