Rupee Crashes Past 90 As Trade Deal Uncertainty And Outflows Intensify
The rupee slid to a record low beyond 90 per dollar on December 3, driven by persistent foreign outflows, heavy offshore speculation and uncertainty over the delayed India–US trade deal. The currency has been weakening for several sessions, repeatedly setting new lows and renewing concerns over capital flows and the RBI’s intervention strategy.
Analysts warn of further downside. Some see 90.5 as the next key level, while others believe the rupee could test 92 if the trade deal remains stalled. Speculative pressure may increase if the currency holds above 90, though positive developments on the bilateral agreement could offer quick relief.
Three forces are driving the decline, sustained foreign portfolio outflows, strong importer dollar demand along with unwinding of offshore NDF positions and geopolitical and trade uncertainty. Despite active RBI dollar sales and forward-market intervention, the rupee still breached the psychological barrier.
A weaker rupee raises import costs, including oil and industrial inputs, potentially pushing up consumer prices. Exporters benefit from improved competitiveness, but companies with dollar debt face higher repayment costs. Hedging also becomes more expensive as markets price in higher volatility.
For policymakers, the challenge is balancing inflation risks with growth support. Heavy intervention can strain reserves, while inaction can fuel further volatility. The episode highlights long-standing structural issues, India’s need for deeper capital flows, stronger export competitiveness and reduced vulnerability to external shocks.
While a softer rupee can help sectors like textiles, garments, IT and BPO services by boosting rupee earnings, gains may be offset for firms dependent on imported inputs.
With the rupee hovering near historic lows, markets now await cues from the RBI, global risk sentiment and any breakthrough in the India–US trade talks to determine whether the pressure will ease or intensify.
