The rupee slid to a fresh record low on Monday, pressured by a prolonged deadlock in US-India trade negotiations and sustained foreign investor outflows from Indian equities and bonds, even as a broadly weaker dollar offered little relief.
The rupee weakened about 0.2 percent to 90.6475 against the dollar, breaching its previous all-time low of 90.55 recorded on December 12. Traders said losses were partly contained by likely intervention from the Reserve Bank of India.
Asia’s worst-performing currency so far this year, the rupee has fallen roughly 5.5 percent in 2025. Sentiment has been hit hard by steep US tariffs — running as high as 50 percent on certain Indian goods — which have dented exports to India’s largest overseas market and reduced the appeal of local assets for foreign investors.
Overseas investors have net sold more than $18 billion worth of Indian equities so far this year, placing India among the most heavily impacted emerging markets in terms of portfolio outflows. Foreign investors have also sold over $500 million worth of Indian bonds in December alone.
Traders said uncertainty surrounding trade negotiations has weighed persistently on the currency. Remarks by India’s chief economic advisor suggesting that a trade deal with the US may only be finalised by March have further dampened sentiment, a trader at a Mumbai-based bank said, adding that capital outflows have been near-constant.
Trade-related concerns extend beyond the US. India and the European Union are also unlikely to conclude a long-awaited free trade agreement by the end of the year, according to a Bloomberg News report published on Friday.
The negative trade outlook has left the rupee unable to capitalise on global currency trends. The dollar index has fallen about 1.1 percent so far this month, but emerging market currencies such as the rupee have failed to benefit.