The Indian rupee fell to a new all-time low on Tuesday, breaking the 91 level against the US dollar for the first time during the day. The currency fell to an intra-day low of about 91.07–91.08 before rising slightly, marking its fourth straight session of record lows.
The rupee started off weak at 90.87 on the interbank foreign exchange market and kept going down. This was because foreign investors were still selling and there were still doubts about a possible trade deal between India and the US. By the middle of the session, it was trading between 91.01 and 91.07, which was about 36 paise less than its last close of 90.78.
Main Reasons for the Drop in Value
The rupee’s sharp drop—more than 6% against the dollar in 2025—has made it one of the worst-performing currencies in Asia this year. Analysts say that both domestic and global factors caused the drop:
Persistent Foreign Institutional Investor (FII) Outflows: Investors from other countries have pulled billions out of Indian stocks because of uncertainty around the world. This has led to steady demand for dollars and capital flight.
India and the US are having trouble reaching a trade deal because of US tariffs on Indian exports and disagreements over agriculture. This has made people less optimistic. Experts say that progress seems far away, and possible delays could push weakness into 2026.
Strong Demand for the Dollar and Hedging Activity: Importers have been buying more dollars, and the fact that the non-deliverable forwards (NDF) market is maturing has added to the downward pressure.
Weakness in Emerging Markets: High US tariffs and a strong dollar index have hurt many emerging currencies, making the rupee’s drop even worse.
Even though some domestic data was good, like the trade deficit in November dropping to a five-month low of $24.53 billion because exports were going up, these things didn’t help.
What Experts Think and See
Anil Kumar Bhansali, who is in charge of the Treasury at Finrex Treasury Advisors, talked about how ongoing FII selling and trade deal uncertainty could cause the rupee to fall to 92 this month if things don’t get clearer.
Currency experts say that volatility may last into January, and that swings may get worse because the markets are thin at the end of the year. The Reserve Bank of India (RBI) has stepped in from time to time through state-run banks to stop too much volatility, but for the most part, it has let the currency depreciate in an orderly way, thanks to India’s strong foreign exchange reserves and low inflation.
A weaker rupee has both good and bad effects. It makes exporters more competitive, especially in the IT and pharmaceutical industries, but it also makes imports more expensive, which could lead to higher inflation and a bigger current account deficit.
What the market did
The Sensex and Nifty fell about 0.4% to 0.6% in early trading, which was in line with the weak currency. Brent crude oil prices, on the other hand, were lower, trading around $60 per barrel. This gave the import bill a small break.
This week, global central banks will make policy decisions, and trade talks will be in the news. People will be keeping a close eye on the rupee’s path. In the near future, analysts think the USD/INR pair will trade between 90.30 and 91.50, with RBI interventions likely to limit the downside.
This historic breach shows how hard it is for India’s external sector to adapt to changing global trade patterns.
