 "Rupee crosses 90-mark against USD in historic low amid trade deal impasse")
The Indian rupee slid to a record low on Wednesday, crossing the 90-mark against the US dollar in opening trade. At 9 am, the INR traded at 90.06 against 1 USD, down 9 paise.
On Tuesday, the rupee had already touched 89.9475 before ending the day at 89.87 — a decline of nearly 0.4 per cent, according to Reuters. Traders said any support from a weaker US dollar is unlikely to offer much relief for now.
A private-sector bank trader told Reuters that the rupee’s fall below 88.80 — a level the RBI had defended for weeks — had “stripped away what had become a psychological and technical anchor for the market”. With that support gone, the rupee has become more vulnerable to long-standing pressures such as weak capital inflows, strong dollar demand from importers and rising speculative bets. On the depreciating rupee, Chief Economic Advisor (CEA) V Anantha Nageswaran said, “It will come back next year. Right now, it's not hurting our exports or inflation. I am not losing my sleep over it. If it has to depreciate, now probably is the right time.”
Capital flows under pressure
India’s balance of payments data for the September quarter shows a sharp decline in capital inflows. Net capital flows dropped to just $0.6 billion, compared with $8 billion in the previous quarter, signalling visible stress in the country’s external sector.
Dollar weakens on Fed Chair signals
The dollar index slipped on Tuesday and continued to fall in Asian trading on Wednesday. The decline followed growing expectations that Kevin Hassett could become the next US Federal Reserve Chair.
According to Morgan Stanley, US President Donald Trump said the list of 10 original candidates had been narrowed “down to one”, and later mentioned Hassett as “a potential Fed chair”. Markets view Hassett as more dovish on interest rates than the current Fed leadership.
Importers boost hedging as rupee crosses 90-mark
Hedging data for November shows that importers booked forward contracts worth nearly $31 billion, an 11 per cent rise compared to the 2020–24 average. Exporters, however, booked only about $21 billion, a decline of around 5 per cent from the same period.
Forward premiums also climbed sharply as the rupee approached the 90 level. The one-month premium rose above 19 paisa, the highest since May, while the one-year implied yield increased by 7 basis points to 2.33 per cent.