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The Indian rupee dropped below 91 per US dollar for the first time on Tuesday, due to ongoing foreign portfolio outflows and a stalemate in trade talks between the US and India. The rupee decreased by 36 paise, falling under the 91 threshold. Over the last ten trading sessions, it has gone down from 90 to 91 against the US dollar, with the domestic currency losing 1% in just five sessions. The currency hit a low of 91.0750, marking a record low for four consecutive days. So far in 2025, the Indian rupee has declined over 6% versus the dollar, making it one of the poorest-performing currencies among emerging markets. Even though the dollar sales by government banks, likely on the behalf of the Reserve Bank of India, helped to ease the decline, traders explained to Reuters that the maturity of positions in the non-deliverable forwards market was putting stress on the rupee.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, mentioned, “Today, we did not expect the rupee to weaken sharply since the trade data for November has surprised positively.” He also noted that the covering of short positions might have contributed to today’s drop. Continuous selling from foreign institutional investors is causing a harmful cycle that is driving the rupee lower, he pointed out. “Typically, when the rupee falls, the Reserve Bank of India steps in by selling dollars to help stabilize it. However, lately, the RBI seems to be allowing the currency to decrease. The low inflation rate in India (0.71% in November) is why the central bank is not stepping in. The fall in the rupee is not negatively impacting the economy,” he observed. India's trade deficit for November shrank to $24.53 billion from $41.68 billion in October.
On another note, experts told Reuters that the rupee’s situation is not likely to improve unless there is progress in the US-India trade discussions. "The easiest path is still for USD/INR to increase from here due to uncertainty about tariffs, but we are cautious about trying to push USD/INR higher at the current high levels," MUFG stated in a note on Tuesday according to Reuters. Furthermore, the US dollar index, which measures the strength of the dollar against a group of six different currencies, was down 0.03% at 98.27. In the domestic stock market, the 30-share benchmark index, Sensex, fell by 363.92 points to 84,849.44 in early trading, while the Nifty declined by 106.65 points to 25,920.65.
