RUPEE SEES SHARP FALL, HITS RECORD LOW OF 90.47 AGAINST US DOLLAR

Indian rupee hit a fresh record low of 90.47 against US Dollar on December 11.

The rupee weakened 0.5% to 90.47 against the US Dollar, as of 1:40 pm, eclipsing its previous all-time low of 90.42 hit on December 4.

The rupee is on course for its worst yearly fall since 2022 as the currency has borne the brunt of challenges to India's external sector ranging from weakness in portfolio flows to steep US trade tariffs on Indian exports.

Asian currencies were trading mixed on Thursday, while the dollar index recouped some losses after dropping to a near two-month low following the Fed's rate decision.

Weakness in the greenback offered little relief to the rupee, with traders citing dollar demand from foreign and local private lenders, likely tied to merchant payments, reported Reuters earlier on December 11.

Fed Chair Jerome Powell's balanced outlook on future rate trajectory eased market nerves about a hawkish message, but the rate cut "alone cannot offset the structural headwinds for the Indian rupee from higher tariffs and U.S. yields," said Rajeev Sharan, head of criteria of model development and research at Brickwork Ratings.

"Investors face considerable uncertainty about the Fed policy path in 2026, particularly with a new Fed Chair set to take over in May 2026. As a result, the 10-year US Treasury yield rose from 4.00% to 4.20% last month.

"The higher interest rate environment and shifting policy expectations have tightened financial conditions, weighed on asset valuations, and increased volatility across rate-sensitive sectors. Expectations were also that the India–U.S. trade deal would have been signed by now, but delays on that front have added to uncertainty. All of this is putting additional pressure on the rupee–dollar exchange rate. Consequently, we expect FII inflows into India to be negatively affected, which could further weigh on equity valuations and impact debt markets," said Nachiketa Sawrikar of Artha Global Multiplier Fund.

"A record October goods trade deficit and muted capital inflows — amid uncertainty around the India-US trade deal — point to a further deterioration in the net Balance of Payments (BoP) position in Q4," analysts at Goldman Sachs said in a note.

"Meanwhile, reduced FX intervention by the RBI over the past one to two weeks has increased INR volatility."

"Many stop-losses got triggered at (rupee's) record low and the currency is likely to stay in a downtrend in the near-term. The next level to watch is 90.70," said Dilip Parmar, a foreign excahnge research analyst at HDFC Securities.

With inputs from Reuters

2025-12-11T08:25:22Z