Mumbai, December 3 — The Indian rupee depreciated past the 90-mark against the U.S. dollar on Wednesday, reaching a record low of 90.28, and continuing its decline for the sixth consecutive session. The currency was last quoted at 90.24, down 0.4% from the previous close, amid persistent pressure from subdued trade and portfolio flows.
The slide highlights the divergence between India’s resilient domestic economic growth and external macroeconomic challenges. Despite stronger-than-expected GDP growth, the rupee is under pressure due to weak capital inflows and ongoing trade tensions, compounded by punitive U.S. tariffs.
Year-to-date, the rupee has declined by 5.3%, marking its steepest annual fall since 2022 and making it the worst-performing currency in Asia this year. Experts attribute the decline to sluggish foreign investment and widening trade deficits.
“Without a trade deal, FX demand from the trade deficit and outflows continues to push USD/INR higher, while FX supply remains limited,” said Joey Chew, Head of Asia FX Research at HSBC Singapore. “Foreign investors are losing patience; net inflows have dried up after an initial positive month in October.”
Foreign investors have pulled approximately $17 billion from Indian equities this year, with foreign direct investment and overseas borrowings also remaining weak, adding to the downward pressure on the rupee. India’s trade deficit widened to over $40 billion in October, and the country’s current account deficit is expected to reach nearly 1.1% of GDP this fiscal year, with the balance of payments forecasted to stay in deficit.
“The macroeconomic picture in India is weak, with rising trade deficits, sluggish GDP growth, declining FDI, and foreign sell-offs in equities,” said Sat Duhra, Portfolio Manager at Janus Henderson Investors.
Market analysts and bankers suggest that any relief for the rupee hinges on a breakthrough in stalled U.S.-India trade negotiations. “The longer it takes to reach a trade deal, the longer the rupee will remain under pressure,” said Sakshi Gupta, Principal Economist at HDFC Bank, who expects the currency to trade between 92 and 93 in the next quarter.
Adding to the currency’s volatility are signs of speculative activity, with non-deliverable forward (NDF) points surging to a seven-month high of 23.25 paisa — nearly a 50% increase in three days. The rise indicates increased trader activity betting on further weakness in the rupee.
The Reserve Bank of India’s limited intervention and cautious stance have emboldened speculators, with forward premiums rising due to heightened importer demand. The implied one-year forward yield jumped 12 basis points, reaching levels unseen since January, reflecting expectations of further depreciation.
Experts warn that unless trade tensions ease or foreign investment improves, the rupee could continue to face downward pressure in the near term.
