MUMBAI: The Indian rupee dropped to a new record low of over 90 per US dollar on Wednesday, continuing its downward trend. Experts say the slide is partly due to delays in finalizing a trade deal with the United States.
This year, the rupee has been one of Asia’s weakest-performing currencies, pressured by India’s widening current account deficit and significant foreign capital outflows.
Earlier optimism surrounding trade talks with Washington had boosted the rupee to a nearly six-month high of 83.75 in May, raising hopes of increased foreign investment into India’s $5 trillion economy. However, setbacks in negotiations, coupled with weak corporate earnings, have led overseas investors to pull out more than $16 billion from Indian equities so far in 2025.
On Wednesday, the rupee weakened by 0.35% to hit 90.19, according to Bloomberg data.
Dilip Parmar, analyst at HDFC Securities, explained that the currency’s decline is primarily due to a “demand-supply imbalance,” with foreign outflows and trade uncertainties further accelerating the fall.
Another contributing factor, Parmar noted, is the absence of substantial intervention by India’s central bank, the Reserve Bank of India (RBI). Analysts say the RBI has occasionally supported the rupee through aggressive dollar sales but has recently allowed more flexibility in the currency’s movement.
Raj Gaikar, research analyst at SAMCO Securities, emphasized that defending a specific rupee level now would be costly and counterproductive. “With inflation running below expectations, the RBI is prioritizing growth over using reserves to maintain artificial exchange rates,” he said.
Gaikar expects the rupee to stabilize in the 88-92 range, adding that the RBI’s current approach indicates a shift toward a market-driven currency regime rather than defending symbolic levels.
