Rupee closes at record low of 90.73 Against US Dollar

Mumbai: The Indian rupee weakened sharply for the third consecutive session on Monday trading around 90.73 to 90.79 per US dollar and flirting with the 91 mark, marking fresh all-time lows amid sustained pressure on the currency. Persistent foreign portfolio investor (FPI) outflows, uncertainty around the US–India trade negotiations, and steady importer hedging demand have continued to skew flows decisively in favor of the dollar. Traders said that the Reserve Bank of India (RBI) has been intermittently present to smooth volatility but allowed the broader trend to remain market-driven.

At the interbank foreign exchange market, the rupee opened at 90.53 per dollar and remained under pressure throughout the session as strong dollar demand from importers and risk averse sentiment dragged it lower. It fell to a record low of 90.79 extending its year to date decline to about 6 per cent but recovered back to 90.73 after the Indian trade deficit for November came lower by $ 17 billion dollars from the previous month’s figures. It ended the session at 90.73 down 25 paise from its previous close.

Foreign investors have net sold over $18 billion of local stocks over the year so far, on track to be the worst yearly outflow on record. “From a macro perspective, the current phase of rupee weakness appears more flow-led than panic-driven. Elevated US yields and domestic capital outflows are outweighing India’s structural strengths in the near term. Until there is a clear reversal in portfolio flows or a positive catalyst on the trade and global risk front, the USD/INR is likely to remain under pressure and volatility is expected to stay elevated,” said Abhishek Goenka founder and chief executive officer atIFA Global.

Anil Bhansali, head of treasury at Finrex Treasury Advisors said, “The rupee is expected in the range of 90.50 to 91.00 unless the trade deal announcements are made and tariffs are reduced at least by 25 bps.” Past data indicates that this is the quickest fall (in terms of number of days) of rupee, scaled to 5 per USD. In less than a year, the rupee has slid from 85 to 90 per dollar.

Earlier, rupee took 1815 days to reach from 65 to 70 per dollar, 581 days from 70 to 75 per dollar and almost around 800-900 days for 75 to 80 and from 80 to 85 per dollar. It is the second quickest fall since Taper Tantrum.

India's merchandise exports to the US, the country's largest export market, rose over 21 per cent year-on-year in November, data released on Monday showed. This helped narrow the country's merchandise trade deficit to a five month low of $24.53 billion last month. The improved data provided only marginal relief to the rupee in the face of persistent corporate hedging demand and likely portfolio outflows. Another data release during the day showed that India’s WPI inflation remained in the negative territory as prices declined 0.32 per cent year on year compared to -1.21 per cent decline in October and 2.18 per cent rise in November 2024.