Indian Rupee Hits Fresh Record Low Amid Concerns Over Pending Trade Deal

The rupee remained under pressure on Tuesday amid concerns over the pending India-US trade deal , breaching the 91-mark for the first time and hitting a fresh record low for the fourth consecutive session. The rupee slumped to 91.08 intra-day before closing at 91.03, down 30 paise from the previous close. The slide from 90 to 91 took less than two weeks. The currency had breached the 90-mark for the first time on December 3. Over the past month, the currency has fallen 2.6%. So far in FY26, the rupee has declined 6.5%, the highest in three years, making it the worst-performing Asian currency In the current financial year so far, the rupee has declined 6.5%, the highest in three years. Consequently, the rupee continues to be the worst-performing currency among its Asian peers. “Weak sentiment from delayed trade deal, combined with foreign outflows and limited RBI intervention, continues to pressure the rupee,” said Madan Sabnavis, chief economist at Bank of Baroda. He said, however, this is not a fair exchange rate considering the fundamentals and weakening dollar. “The CEA’s (chief economist advisor) latest remarks on a trade deal by March have worsened sentiment, indicating more volatility in coming months and further rupee weakening. I believe that the RBI interventions will not help in such conditions,” Sabnavis added. Though not targeting any level, the RBI intervenes in the market through its dollar sales in a mild manner, according to traders. Importers are panic-buying amid fears of further rupee depreciation, they said. “There was high demand for dollars due to capital market outflows and buying pressure from corporates towards hedging cover and oil related payments. Therefore, the rupee which opened weak, immediately lost level,” said a dealer at a public sector bank. Foreign investors pulled out $1.5 billion from equity in December, according to data from the stock exchange. The debt market has seen an outflow of Rs 10,315 crore, data from Clearing Corporation of India Ltd (CCIL) showed. “Though the trade data was positive, the biggest worry remains on the imbalance between dollar demand and supply. Some intervention is needed to support the currency now,” said Dilip Parmer, research analyst at HDFC Securities. According to him, the rupee will likely trade in the range of 90.70-91.45 in the near-term. Axis Bank said the base case is for “mild, not wild” depreciation of the rupee. “The sharply weaker REER (real effective exchange rate) and ongoing reforms to improve the ease of doing business are supportive of sentiment and could incentivise fresh inflows over time. The rupee is projected at 90 by June 2026 and 92 by June 2027, with the pace of depreciation dependent on the evolution of capital flows and global risk appetite.”