Rupee breaches 90/USD for first time; falls 19 paise to close at all-time low of 90.15

Mumbai: The rupee breached the 90-a-dollar level for the first time to settle at a fresh all-time low of 90.15 on Wednesday, down 19 paise from its previous close, amid sustained foreign fund outflows and higher crude oil prices.

Uncertainty over the India-US trade deal, along with the lack of Reserve Bank of India (RBI) effort to stop the slide in the local unit, put further pressure on the rupee, according to forex traders.

At the interbank foreign exchange, the rupee opened at 89.96 against the US dollar and fell to a record intraday low of 90.30 during the session before closing at a new all-time low of 90.15, down 19 paise from its previous close.

On Tuesday, the rupee settled 43 paise down at a lifetime low of 89.96 against the US dollar, largely owing to continued short-covering from speculators and sustained importer demand for the American currency.

Speaking at an event on Wednesday, Chief Economic Adviser V Anantha Nageswaran said the government is not losing sleep over the declining rupee.

The falling rupee is not affecting inflation or exports, he said, and expressed hope that it should improve next year.

Commenting on the fall, research report from the SBI's Economic Research Department said, a sliding rupee is not a weak rupee even as it breaches the psychological barrier of 90.

With MPC scheduled to take a call on the policy rate, a cut at this juncture can be construed as a knee-jerk reaction to protect the rupee, which would be detrimental to an otherwise fairly resilient currency, riding the domestic vigour, it said.

Foreign exchange analysts have attributed the fall in Indian currency to the intense selling of Indian stocks by foreign investors.

"The rupee hit a fresh all-time low of 90.30 amid selling pressure from foreign investors and a surge in crude oil prices. Uncertainty over the announcement of India-US trade deal has also weighed on the rupee. However, a weak US dollar index prevented a sharp fall," Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, said.

"We expect the rupee to trade with a slight negative bias on persistent FII outflows and higher crude oil prices. However, a weak dollar and rising odds of a rate cut by the Fed in December may support the rupee at lower levels," he said, adding that the USD-INR spot price is expected to trade in a range of Rs 89.80 to Rs 90.50.

"The rupee was easily allowed by the RBI to cross 90, and it even fell to 90.30 before the RBI stepped in," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

Meanwhile, the seasonally adjusted HSBC India Services PMI Business Activity Index rose to 59.8 in November, from 58.9 in October, supported by new business growth.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.20 per cent lower at 99.16.

Brent crude, the global oil benchmark, was trading 0.91 per cent lower at USD 63.02 per barrel in futures trade.

On the domestic equity market front, Sensex declined 31.46 points to settle at 85,106.81, while Nifty was down 46.20 points to 25,986.

Foreign Institutional Investors sold equities worth Rs 3,206.92 crore on Wednesday, according to exchange data.

"Rs @90. The proximate reason: foreign selling of Indian stocks both FPI & PE under FDI. Indian investors buying. Time will tell who is smarter. For now foreigners seem smarter. 1 year nifty dollar return is 0. But this a long game. Time for Indian business to shake out of comfort zone," veteran banker Uday Kotak said in a post on X.

Apart from the selling pressure from foreign investors, experts said that a sudden crash in cryptocurrencies spurred the dollar demand.

"Slow export growth, uncertainty around trade deals—especially with the US—and continued foreign investor outflows have all pushed demand for the dollar higher. Escalating geopolitical tension and the sudden crash in cryptocurrencies have driven safe-haven flows into the dollar, weighing on the rupee," said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

According to Rahul Gupta, Chief Business Officer, Ashika Group, while the RBI has stepped in periodically to smooth volatility, the broader trend reflects a recalibration of India's external sector under tighter global financial conditions.

"In the near term, the rupee is likely to remain under pressure and could trade in the 89.50–91.20 range, especially if crude oil prices stay elevated and foreign investors remain risk-averse," Gupta said.

Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said that record-high metal and bullion prices have further worsened India's import bill, while steep US tariffs continue to strain export competitiveness.

"Muted RBI intervention has also contributed to the swift depreciation. With the RBI policy announcement on Friday, markets expect clarity on whether the central bank will step in to stabilise the currency. Technically, the rupee is deeply oversold, and a move back above 89.80 is essential for any meaningful recovery," Trivedi said.