Rupee slips past 91/$ to fresh low for 4th session; more downside?

Rupee at record low: The unit opened 4 paise lower on Tuesday at 90.77 against the greenback, but fell 35 paise during the session to a new low of 91.08, according to Bloomberg

The Indian rupee weakened past the 91 level against the dollar on Tuesday, sliding to a fresh record low for the fourth straight session, weighed down by equity market outflows and delays in a potential US trade deal.

 

The unit opened 4 paise lower on Tuesday at 90.77 against the greenback, but fell 35 paise during the session to a new low of 91.08, according to Bloomberg. It is the worst-performing currency in Asia in 2025 so far, down 6.3 per cent against the dollar. In December alone, the domestic currency has depreciated 1.72 per cent. The Rupee fell past the 90 mark on December 3, 2025.

 

The recent fall in the unit comes amid India’s widening current account deficit and lack of clarity in the US-India trade deal. However, the recent November trade date showed that the country’s trade deficit narrowed to a five-month low of $24.53 billion, with exports rising to a three-and-a-half-year high.

 

Foreign portfolio investors have continued to pare exposure to Indian equities and debt, leading to steady dollar outflows, analysts said. Global funds have sold domestic equities worth ₹1.61 trillion so far this month, including ₹17,821 crore of outflows across all sessions in December. 

 

Chief Economic Advisor (CEA) V Anantha Nageswaran, last week, said India and the US have ironed out “most of their pending differences” on trade, and that a formal agreement could be in place by March 2026.

 

Meanwhile, on Monday, the Minister of State (Finance), in a statement to the Lok Sabha, attributed the depreciation of currency in the current FY2025-26 to trade deficit and prospects arising from ongoing developments in India’s trade agreement with the US, amid relatively weak support from the capital account. 

 

A sharp weakness in the rupee was not expected on Tuesday since the November trade data has come better-than-expected, VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd. Covering of short positions may be a factor in today’s decline, he said.  When the rupee declines, the central bank intervenes by selling dollars to stem the decline of the rupee, he said. "But recently, the Reserve Bank of India's (RBI) policy has been to let the currency decline. Low inflation in India is the reason for this non-intervention by the central bank."

Rupee to see more fall?

The Reserve Bank of India has been present in the market to smooth volatility, but it is allowing the currency to adjust gradually rather than defend any specific level, Akshat Garg, Head - research and product at Choice Wealth, said in a recent note. "In the near term, the rupee is expected to remain volatile, with movements driven more by flows and sentiment than fundamentals."

 

Market participants expect some forex intervention from the RBI as they have sharply intervened twice in 2025, Kunal Sodhani, vice president at Shinhan Bank India, noted. "For USDINR, 89.80 acts as a base while levels of 91.60 can be tested."

 

The rupee is expected to fall to 91.50 per dollar over the next two to three months due to continued pressure from India’s widening current account deficit, Bloomberg reported, quoting Nuvama Institutional report. The currency is likely to weaken further as importer demand stays strong due to a rise in gold and silver prices, the analysts from the brokerage said.