The Indian rupee plummeted to a new record low of Dh24.53 on Thursday, extending its decline beyond the 90-to-a-dollar mark. This drop was exacerbated by corporate dollar sales and stagnant US trade negotiations, affecting Asia’s weakest currency.
In 2025, the rupee has depreciated over 5% against the dollar, impacted by US tariffs up to 50% on Indian goods, which have hurt exports to India’s largest market and decreased the attractiveness of local stocks.
Foreign investors have withdrawn nearly $18 billion from Indian equities this year, marking India as one of the most impacted markets in terms of portfolio outflows.
On Thursday, the rupee fell to 90.4675 against the US dollar, surpassing its previous record low of 90.42 from December 4. It ended the day at 90.3675, down 0.4%.
Stop-loss orders on long rupee positions were activated when it fell below 90.42, according to Dilip Parmar, an exchange analyst at HDFC Securities.
“The currency is expected to remain under pressure in the near term. The next critical level is 90.70,” he noted.
Central Bank Intervention
The Reserve Bank of India likely stepped in to prevent sharper declines, five traders indicated. One described the intervention as mild, aimed at slowing the fall rather than maintaining a specific level.
The RBI is expected to accept a weaker rupee as the external sector faces various challenges, Reuters reported last week.
“A record October trade deficit and subdued capital inflows—amid uncertainties about the India-US trade agreement—indicate further net Balance of Payments deterioration in Q4,” Goldman Sachs analysts mentioned.
“Reduced RBI FX interventions in the past 1-2 weeks have increased INR volatility,” the note stated.
The rupee’s 1-month realized volatility has climbed to nearly 5.5%, its highest since July.
US Trade Deal Uncertainty
Analysts emphasize that progress in US-India trade talks is crucial for the rupee’s recovery.
India’s chief economic adviser anticipates the deal will be finalized by March, Bloomberg News reported.
Federal Commerce Secretary Rajesh Agrawal met with US Deputy Trade Representative Rick Switzer for bilateral trade discussions on Wednesday.
Meanwhile, Mexico’s decision to impose tariffs up to 50% is expected to impact $1 billion worth of shipments from major Indian car exporters.
