Rupee Slides to Fresh Record Low at 90.47 Against the Dollar

Rupee Slides to Record Low of 90.47 Against US Dollar as Global and Domestic Pressures Intensify

The Indian rupee hit a fresh record low of 90.47 against the US Dollar on December 11, marking one of its sharpest drops in recent months and setting the stage for what may become the currency’s worst yearly performance since 2022. The decline comes amid a challenging global backdrop, weakening portfolio flows, and persistent uncertainty over trade negotiations between India and the United States.

As of 1:40 pm, the rupee had weakened 0.5% to 90.47, breaching its previous all-time low of 90.42 touched on December 4. Despite a softening dollar index following the US Federal Reserve’s latest policy decision, the rupee failed to find relief, weighed down by structural pressures on India’s external sector.

A Record Fall Highlights Mounting Pressures on India’s External Sector

The rupee’s trajectory in 2024 has been shaped by a combination of domestic constraints and global headwinds. Analysts note that the currency has struggled to counter the effects of weak foreign portfolio inflows, elevated US trade tariffs, and a deteriorating Balance of Payments (BoP) position.

According to market data, the rupee is on track for its steepest annual fall since 2022, highlighting the persistent strain on India’s currency stability. Traders said that significant dollar demand from foreign and private-sector lenders, likely linked to merchant payments, contributed to the pressure on Wednesday. This aligns with earlier commentary from Reuters, which reported continued buying support for the US Dollar despite a mild recovery in Asian currencies.

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Global Markets Add Fuel as Fed Uncertainty and Higher Yields Drive Volatility

The weakness in the rupee comes at a time when global markets are navigating another shift in US monetary expectations. With a new Federal Reserve Chair set to take over in May 2026, investors are grappling with heightened uncertainty around the rate path over the next two years.

“The higher interest rate environment and shifting policy expectations have tightened financial conditions, weighed on asset valuations, and increased volatility across rate-sensitive sectors,” said Nachiketa Sawrikar of Artha Global Multiplier Fund.

He added that delays in finalizing the much-anticipated India–US trade deal have further clouded the outlook, hurting sentiment and pressuring the rupee-dollar exchange rate. Sawrikar also warned that the currency’s slide may negatively impact FII inflows, thereby affecting equity valuations and debt markets in the months ahead.

Trade Deficit and Slowing Inflows Deepen Concerns Over Balance of Payments

India’s widening trade deficit remains another factor pulling the rupee downward. The record October goods trade deficit, coupled with muted capital inflows, has led analysts to forecast a deeper BoP deficit in the final quarter of FY25.

“A record October goods trade deficit and muted capital inflows — amid uncertainty around the India-US trade deal — point to a further deterioration in the net Balance of Payments position in Q4,” Goldman Sachs noted in a recent report.

Goldman also highlighted that the Reserve Bank of India (RBI) appears to have reduced its FX intervention over the past one to two weeks. While the RBI has historically stepped in to smooth volatility during sharp rupee moves, the central bank’s recent restraint has allowed the spot rate to adjust more freely, increasing intraday fluctuations.

Rupee Outlook: Analysts Warn More Downside Possible as Volatility Rises

The combination of external pressures, reduced intervention, and growing market uncertainty has prompted analysts to caution that the rupee may remain under pressure in the short term.

“Many stop-losses got triggered at the rupee’s record low, and the currency is likely to stay in a downtrend in the near term,” said Dilip Parmar, Foreign Exchange Research Analyst at HDFC Securities. Parmar added that the next key level to watch is 90.70, a breach of which could lead to further weakness.

Market participants also note that the US Dollar may continue to draw support from elevated Treasury yields, particularly if US inflation remains sticky or if the Fed signals a longer-than-expected hold on rate cuts.

What This Means for Investors and Markets

With the rupee hitting a record low, investors across equity, currency, and debt markets are recalibrating expectations. A weaker rupee typically:

• Raises import costs, especially for oil

• Pushes up inflationary pressures

• Makes foreign borrowing more expensive

• Reduces the dollar return for FPIs

• Improves export competitiveness for some sectors

However, the current decline appears driven more by macro uncertainty than by cyclical demand-supply factors, amplifying volatility for risk assets.

Conclusion: Rupee Weakness Reflects a Complex Mix of Domestic and Global Challenges

The rupee’s fall to 90.47 against the US Dollar underscores the fragility of India’s currency environment at a time when global rates remain elevated, trade deals are pending, and capital inflows are uneven. While analysts believe that long-term fundamentals remain stable, the near-term outlook points to more volatility and potential downside, especially if the RBI refrains from further intervention.

As markets await clarity on US monetary policy, India’s trade negotiations, and the upcoming BoP data, the rupee’s trajectory will remain a crucial indicator of broader economic sentiment—and a key area of focus for investors navigating an increasingly uncertain global landscape.

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