Rupee Hits New All-Time Low of 90.75 Against Dollar Amid Mounting Pressures
The Indian rupee weakened to a fresh record low against the US dollar on Monday, reflecting persistent pressure from external and domestic headwinds. The currency slipped to 90.75 per dollar, breaching its previous all-time low of 90.55 recorded on December 12, as uncertainty around India–US trade negotiations and sustained foreign portfolio outflows dampened investor confidence.
At the interbank foreign exchange market, the rupee opened at 90.53 and continued to slide through the session. Forex traders said the currency remains firmly biased toward depreciation, with market participants adopting a wait-and-watch approach amid a lack of clarity on the trade front.
Trade Deal Stalemate Continues to Cloud Currency Outlook
One of the key factors weighing on the rupee is the prolonged stalemate in India–US trade negotiations. Market participants say the absence of a breakthrough has hurt sentiment, especially at a time when global investors are becoming increasingly selective about emerging market exposure.
“A major drag on the market continues to be the elusive US–India trade deal,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. He added that the uncertainty is impacting India’s exports to the US, contributing to a widening trade deficit and sustained depreciation pressure on the rupee.
Currency traders note that without a positive catalyst from the trade talks, the rupee is likely to remain vulnerable to global dollar strength and capital outflows.
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Foreign Outflows and Trade Deficit Add to Rupee Pressure
Persistent selling by foreign portfolio investors (FPIs) in both equities and debt has further weakened the rupee. On Friday alone, FPIs sold Indian equities worth ₹1,114.22 crore, according to exchange data.
At the same time, concerns around a widening trade deficit have resurfaced. Higher import demand and uneven export growth have increased dollar demand in the market, while capital inflows remain muted.
“A familiar mix of headwinds continues to dominate,” said a Mumbai-based currency trader. “The lack of a US trade deal has sapped sentiment, capital flows remain weak at a time when the trade deficit is widening, and a depreciation bias is encouraging importers to hedge aggressively.”
Importer Hedging and Thin Exporter Supply Skew Market Flows
Traders said daily market flows have become increasingly one-sided. Importers, anticipating further rupee weakness, are stepping up dollar buying to hedge their exposure. Exporters, on the other hand, are reluctant to sell dollars at current levels, preferring to wait for more favourable rates.
“What stands out is how skewed the daily flow has become,” the trader added. “The order book is stacked with buying interest, with exporter offers thin and spaced out.”
This imbalance has amplified intraday volatility and made it difficult for the rupee to stabilise, even during periods of mild dollar weakness globally.
RBI Intervention Seen, But Support Appears Less Aggressive
The Reserve Bank of India (RBI) has intervened periodically in recent months to curb excessive volatility in the rupee. However, market participants say the central bank’s support appears to have softened since the currency breached the 88.80 level.
“FPIs continue to be in selling mode in equity and debt, while the RBI has been selling dollars to fund their long positions,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
Traders believe the RBI is allowing a gradual depreciation to preserve foreign exchange reserves, stepping in mainly to smooth sharp or disorderly moves rather than defend a specific level.
Equity Market Weakness Adds to Negative Sentiment
Domestic equity markets also traded under pressure, reinforcing the negative backdrop for the rupee. The Sensex was down 298.86 points at 84,968.80, while the Nifty slipped 121.40 points to 25,925.55 during the session.
Weak equity performance often triggers additional foreign outflows, creating a feedback loop that puts further strain on the currency. Analysts say sustained weakness in equities could limit any near-term recovery in the rupee.
Rupee Performance Shows Persistent Downtrend in 2025
The rupee’s fall to 90.75 marks its second straight session at a record low and caps a week in which the currency lost nearly 0.5 percent. On a year-to-date basis, the rupee has depreciated 5.6 percent, making it one of the weaker-performing Asian currencies in 2025.
While global dollar strength has played a role, analysts say domestic factors—such as trade uncertainty, capital outflows and importer demand—have amplified the pressure.
What Investors Should Watch Going Ahead
For investors, the rupee’s trajectory will hinge on a few critical factors:
Progress on India–US trade negotiations, which could improve export sentiment and capital flows
Foreign portfolio investor behaviour, especially in equities and debt
RBI’s intervention strategy and tolerance for further depreciation
Global dollar trends and US interest rate expectations
Until there is clarity on these fronts, currency experts caution that the rupee may remain under pressure, with volatility likely to persist in the near term.
Outlook: Cautious Near-Term View for the Rupee
While sporadic pullbacks cannot be ruled out, the broader bias for the rupee remains negative unless external conditions improve meaningfully. A breakthrough in trade talks or a reversal in foreign flows could provide temporary relief, but in the absence of such triggers, the currency is expected to trade with a depreciation bias.
For now, investors and importers alike remain cautious, bracing for continued volatility as the rupee navigates a challenging macro environment.
