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

The RBI's three-year dollar-rupee buy/sell swap auction, which is scheduled for Tuesday, is now in focus

The rupee hit a new low for a third consecutive trading session on Monday, touching an intraday low of 90.80 per dollar, as uncertainty surrounding the India-US trade deal continued to weigh on the domestic currency, dealers said.

 

The Indian currency pared some losses towards the end of the session after the country’s trade deficit narrowed to a five-month low of $24.53 billion in November, with exports rising to a three-and-a-half-year high.

 

The rupee settled at 90.73 per dollar — a fresh closing low — compared with 90.42 per dollar on Friday. It is the worst-performing currency in Asia in 2025 so far, down 5.64 per cent against the dollar. In December alone, the domestic currency has depreciated 1.41 per cent. 

 

 

Despite the positive trade data, the rupee is likely to remain under pressure amid prevailing risk-averse sentiment, strong dollar demand from importers and persistent foreign outflows, which have dented investor confidence, dealers said.

 

“Positive trade data is just a fleeting comfort,” said a dealer with a private bank. “It (rupee) will continue to see a gradual depreciation in the absence of a US-India trade deal. Also, the RBI (Reserve Bank of India) is missing from the market.” 

 

The narrowing of the trade deficit was driven by a decline in gold, oil and coal imports, while exports to the US picked up, according to government trade data released on Monday. Commerce Secretary Rajesh Agrawal said India and the US were “very close” to finalising 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 foreign direct investment in the insurance sector, forex swap, and upcoming initial public offerings, but we are yet not out of the woods. In the near term, the technical bias for the spot dollar-rupee pair remains bullish, with key resistance at 90.95 and support at 90.50 to 90.30.”

 

Persistent FPI outflows, uncertainty around India-US trade negotiations and steady importer hedging demand have continued to skew flows 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 & CEO of IFA Global.

 

Dealers said forward premiums were higher as liquidity remained tight, with importers actively buying and the RBI not rolling over its forward positions, which kept premiums supported.

 

The RBI’s three-year dollar-rupee buy/sell swap auction, scheduled for Tuesday, is now in focus of the market. Dealers expect the swap to be fully subscribed, but corporate interest could be muted due to elevated hedging costs.

 

“From a macro perspective, the current phase of the rupee’s 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, dollar/rupee is likely to remain under pressure and volatility is expected to stay elevated,” Goenka added.

 

Meanwhile, the dollar index fell to 98.30, though the broader narrative suggests the index may have peaked unless upcoming US jobs and inflation data alter its trajectory. The euro and the British pound were stable, while the yen strengthened to 155.00 on expectations of a rate hike by the Bank of Japan at its upcoming meeting. Among Asian currencies, the Chinese yuan also gained, rising to 7.0442 against the dollar.