Rupee hits all-time low of 90.56 against dollar: 5 factors driving the slide

The rupee weakened to an all-time low of 90.56 against the US dollar on Friday (December 12), pressured by a mix of domestic and global factors that weighed on sentiment. The currency opened at 90.43 and extended Thursday’s (December 11's) sharp drop, despite intermittent support from the Reserve Bank of India.

Here are the key drivers behind the rupee’s latest decline:

Uncertainty over India–US trade deal

Markets remain on edge as negotiations between India and the visiting US delegation enter the final day. Traders say the absence of clear progress has fuelled caution. MUFG noted the rupee is “reflecting ongoing uncertainty over a potential trade deal,” with concerns that tariff issues may not be resolved soon.

Persistent foreign investor outflows

Foreign Institutional Investors continue to trim exposure. They sold ₹2,020.94 crore in equities on Thursday (December 11) and have offloaded nearly $2.5 billion in stocks and debt this month. The steady outflows have become a major drag on the currency.

Heavy dollar demand from importers

Importers increased dollar purchases as global precious metal prices surged, putting additional pressure on the rupee. Dealers said the aggressive buying contributed to the currency slipping deeper into uncharted territory.

Mixed global cues and firmer dollar index

The dollar index edged up to 98.37, while Brent crude rose 0.67% in futures trade. Asian currencies traded mixed, limiting regional support. Although the US Federal Reserve’s softer outlook has pushed the dollar near a two-month low, global risk appetite remains fragile.

RBI intervention helps prevent steeper fall

Traders said the Reserve Bank of India stepped in to smooth volatility, preventing the rupee from sliding further. Analysts expect the central bank to stay active in the market if depreciation pressures persist.

Despite the currency’s weakness, domestic equities advanced in early trade.

With trade talks still uncertain and outflows continuing, the rupee is on track for a weekly loss of about 0.5%.

-With agencies inputs