The Indian rupee sank to a fresh record low on Tuesday, slipping past the 91-per-dollar mark as delays in the India–US trade deal, persistent foreign fund outflows and strong dollar demand kept pressure on the currency. This is the fourth straight session of losses for the rupee, underlining fragile market sentiment.
The rupee touched an intraday low of 91.08 before settling at 91.03, down 30 paise from the previous close. The fall from 90 to 91 has taken less than two weeks, after the currency breached the 90 level for the first time on December 3. Over the past month, the rupee has weakened about 2.6 percent.
In the current financial year so far, the rupee has depreciated 6.5 percent — its steepest annual decline in three years — making it the worst-performing currency among its Asian peers.
“Weak sentiment from the delayed trade deal, combined with foreign outflows and limited RBI intervention, continues to pressure the rupee,” said Madan Sabnavis, chief economist at Bank of Baroda. He added that the current level does not reflect underlying fundamentals, especially given the recent softening in the dollar.
Sabnavis noted that recent comments from the chief economic adviser suggesting a trade deal by March have added to uncertainty, increasing volatility and the risk of further rupee weakness. “In such conditions, RBI intervention may not be very effective,” he said.
Traders said the Reserve Bank of India is intervening through dollar sales, but only in a mild manner. Importers, meanwhile, are panic-buying dollars amid fears of further depreciation.
“There was strong dollar demand due to capital market outflows and hedging by corporates, along with oil-related payments. The rupee opened weak and quickly lost ground,” said a dealer at a public sector bank.
Foreign investors pulled out about $1.5 billion from Indian equities in December, according to stock exchange data. The debt market has seen an outflow of ₹10,315 crore, as per figures from the Clearing Corporation of India Ltd.
“Even though trade data has been positive, the key concern remains the imbalance between dollar demand and supply,” said Dilip Parmer, research analyst at HDFC Securities. He expects the rupee to trade in the 90.70–91.45 range in the near term, adding that some intervention is needed to stabilise the currency.
