Rupee Breaches 91 On Continuous Foreign Outflows, Uncertainty On India-US Trade Deal

The rupee is currently the worst-performing Asian currency, with 6 per cent depreciation witnessed in 2025 so far.

Foreign portfolio investors have withdrawn over $2.7 billion in the first two weeks of December alone, placing the month among the largest episodes of net outflows recorded this year. Over the year so far, FPIs have net sold over $18 billion of local stocks, on track to be the worst yearly outflow on record.

At the interbank foreign exchange, the rupee opened at 90.87 against the greenback and traded in the range of 90.76 to 91.14 before settling at 91.01 (provisional), down 23 paise from its previous
close.

Anil Bhansali, head treasury at Finrex Treasury Advisors said, “Rupee made a new lifetime low as dollar buying continued with news that (US President) Donald Trump has not agreed to the new trade proposals from India. So the deal goes into limbo till a new one is finalized.”

“The 92 level looks eminent now unless RBI has other ideas or the India US trade deal is finalized,” added Bhansali.

Anindya Banerjee, Head Currency and Commodity Research, Kotak Securities said, “Globally, rising US bond yields and expectations of a Bank of Japan rate hike have triggered an unwinding of the yen carry trade. This has led to risk aversion across equities, credit, crypto, and some commodities, adding speculative pressure on emerging-market currencies, including the rupee.

“In the near term, the 90 level remains a key support, while 91.25 is an important resistance. A sustained break higher could open the door towards 92. The RBI’s relatively limited intervention so far appears deliberate. With India’s growth strong and inflation contained, policymakers may be comfortable allowing some currency depreciation, especially in a global trade-war environment where a weaker currency can support export competitiveness,” added Banerjee.

The RBI injected $5 billion during the day through a foreign-exchange swap auction, deploying the tool for the first time since March as signs of liquidity strain emerge among lenders. The auction drew bids a little over twice the $5 billion size. The swap is part of a $16 billion liquidity injection into the banking system, aimed at boosting transmission of rate cuts to lending rates. In a buy-sell swap, the RBI purchases dollars from banks against rupees and agrees to sell them back at a future date — injecting rupee cash up front.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.08 per cent lower at 98.23.

The Union government on Monday tried to allay concerns in the Lok Sabha over the continued depreciation of the Indian rupee against the US dollar.

“The exchange rate of the Indian rupee (INR) vis-à-vis the US dollar closed at Rs 89.41 per dollar on November 21, 2025. It was at Rs 89.64 per dollar on December 1, 2025, and further weakened to Rs 90.42 per dollar on December 4, 2025,” Minister of State for Finance Pankaj Chaudhary said in Parliament on December 15, 2025. He said that the rupee is market-determined and that there is no target, level or band prescribed for the exchange rate. “The RBI continuously monitors developments in the foreign exchange market and intervenes only to address episodes of excessive volatility,” Chaudhary said.

The minister added that the RBI closely tracks global developments that could influence the dollar–rupee exchange rate, including monetary policy actions by major central banks, key global economic
data releases, OPEC+ decisions, geopolitical developments, and daily movements in G10 and emerging-market currencies.