Rupee hits record low for third straight session on US-India deal jitters

  The rupee hit a new low for the third consecutive trading session, touching an intraday low of 90.80/$ on Monday, as uncertainty around the US-India trade deal continued to put pressure on the domestic currency, dealers said.   The Indian unit recovered some losses towards the end of the trading session as the country’s trade deficit fell to a five-month low of $24.53 billion in November, with exports hitting a three-and-a-half-year high.   The local unit settled at 90.73 per dollar — a new closing low — against the previous close of 90.42 per dollar on Friday. The Indian unit is the worst-performing currency in Asia in 2025, falling 5.64 per cent against the dollar. In December so far, the domestic unit has depreciated by 1.41 per cent.   Despite positive trade data, the rupee could remain under pressure because of prevailing risk-averse market sentiment, compounded by strong US dollar demand from importers and persistent foreign outflows, which dented investor sentiment, dealers said.   “A positive trade data is just a fleeting comfort,” said a dealer with a private bank. “It (rupee) will continue to see a gradual depreciation amid absence of a US-India trade deal. Also, RBI (Reserve Bank of India) is missing from the market.”   The squeeze in the trade deficit was on account of a fall in gold, oil and coal imports, while exports to the US picked up, government trade data released on Monday showed. Commerce Secretary Rajesh Agrawal on Monday said India and the US are ‘very close’ to closing the initial framework of the deal.   “We have been continuously facing foreign fund outflows,” said Dilip Parmar, research analyst, HDFC Securities.   “Before touching the 91 levels, some appreciation or corrections could be there on charts owing to anticipated positive development regarding FDI in insurance sector, forex swap, and upcoming IPOs but we are yet not out of the woods. In the near term, the technical bias for the spot USD-INR pair remains bullish, with key resistance at 90.95 and support at 90.50 to 90.30,” Parmar added.   Persistent FPI outflows, uncertainty around the US–India trade negotiations, and steady importer hedging demand have continued to skew flows decisively in favour of the dollar. “While the RBI has been intermittently present to smooth volatility, it has allowed the broader trend to remain market-driven,” said Abhishek Goenka, founder and CEO of IFA Global.   Dealers said premiums were higher because liquidity was tight as importers were buying, and the RBI did not roll over its forward positions, which kept premiums supported.   The RBI's three-year dollar-rupee buy/sell swap auction, which is scheduled for Tuesday, is now in focus. Dealers expect the swap to be fully subscribed but say corporate interest could be muted due to elevated hedging costs.   “From a macro perspective, the current phase of rupee weakness appears more flow-led than panic-driven. Elevated US yields and domestic capital outflows are outweighing India’s structural strengths in the near term. Until there is a clear reversal in portfolio flows or a positive catalyst on the trade and global risk front, USD/INR is likely to remain under pressure and volatility is expected to stay elevated,” Goenka added.   As the dollar index fell to 98.30, the broader narrative remains that the dollar index has peaked unless the incoming US jobs data and inflation prints change the trajectory of the index. The euro and Great Britain pound (GBP) were stable while the yen gained to 155.00 as a rate hike from the Bank of Japan is expected in its upcoming meeting. The Chinese currency, yuan, further gained to 7.0442 among Asian currencies.