Rupee hits new low on weak sentiment amid US trade deal uncertainty

The currency, Asia's worst performer in 2025, saw mild RBI intervention as FPIs sold over ₹14,000 crore in equities this month

The rupee fell to a new low for the second consecutive session on Friday as sentiments remained negative on a delayed trade deal with the US. The domestic currency is expected to remain under pressure, while the Reserve Bank of India is expected to intervene via dollar sales to contain excess volatility, said dealers.

 

The rupee fell to 90.56 per dollar during the day, however, it recovered slightly by the end of the trade to settle at 90.42 per dollar, against the previous close of 90.37 per dollar.

 

“The rupee is under pressure from continued FPI outflows across both bonds and equities. With global yields climbing, Indian bonds are facing stress from the unwinding of the USD and JPY [Japanese Yen] carry trades,” said Anindya Banerjee, head Currency and Commodity, Kotak Securities.

 

 

“There are, however, incremental positives around the India-US trade deal, which could provide intermittent relief to the rupee. Overall, we expect a broad trading range of 89.50–91.00 on spot,” he added. 

 

Sustained FPI outflows in both equities and debt segments continues to generate steady dollar demand, keeping the rupee under pressure. Despite supportive cues, a softer dollar index, easing oil prices, and a stronger Chinese Yuan, the currency has struggled to gain traction.

 

FPIs have net sold ₹14,466 crore worth of equities in December so far, whereas they have net sold ₹13,459 crore worth of debt in the same period. In November, FPIs had sold a net total of ₹72,201 crore worth of debt.

 

The Indian unit is the worst performing currency in Asia in 2025, falling 5.32 per cent against the dollar. In December so far, the domestic unit has depreciated by 1.07 per cent.

 

“RBI protected the rupee at 90.56 and brought it down to 90.27 but FPIs remain sellers of equity and debt keeping dollar buying pressure on the rupee consistently. The dollar index (down), oil prices (down), CNH (up) have all been favourable for the rupee yet constant pressure has been keeping it lower. Till announcement of trade deal comes we expect rupee to continue falling as inflows have become negligible in comparison to outflows,” said Anil Kumar Bhansali, head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

 

Meanwhile, latest data by the RBI showed that India’s foreign exchange reserves increased by $1 billion in the week ending December 5.

 

The total reserves stood at $687 billion at the end of the reported week.

 

The total reserves increased on the back of a rise in gold reserves which rose by $1.2 billion during the reported week. On the other hand, foreign currency assets decreased by $151 million during the same period.