Indian rupee breaches 91 against USD, hits lifetime low
What's the story
The Indian rupee has hit a new record low, breaching the 91-per-dollar mark for the first time. The fall is due to increased hedging activity and portfolio outflows amid stalled trade talks between India and the United States. The currency fell by 0.3% to 91.0750 earlier today, marking its fourth consecutive session at an all-time low.
Currency decline
Rupee's performance and foreign investment trends
The rupee has fallen over 6% against the dollar in 2025, making it one of the worst-performing currencies in emerging markets. The steep US tariffs on Indian exports have negatively impacted trade and portfolio flows. Foreign investors have net sold over $18 billion worth of local stocks this year, heading toward their largest annual outflows ever.
Market intervention
Dollar sales by state-run banks slow rupee's slide
The rupee's fall was also due to the likely maturity of positions in the non-deliverable forwards market. However, dollar sales by state-run banks, possibly on behalf of the Reserve Bank of India (RBI), helped slow its decline. India's central bank is expected to tolerate a weaker rupee as the country's external sector faces multiple challenges.
Future outlook
Analysts predict continued rupee depreciation amid trade uncertainties
Analysts believe that the rupee will continue to depreciate unless there is a breakthrough in US-India trade negotiations. MUFG said in a note on Tuesday, "The path of least resistance is still for USD/INR to rise from here given uncertainty around tariffs." However, they are hesitant to chase USD/INR higher at these elevated levels due to the current market conditions.
Trade impact
India's trade performance and future negotiations
Despite the challenges, India's exports rebounded in November, helping to offset the impact of high US tariffs. Shipments to the US grew by 21% year-on-year in November, narrowing India's merchandise trade deficit to a five-month low of $24.53 billion. India is still engaged with the US to finalize a trade deal "sooner than later," according to the country's trade secretary.