Rupee slips to all-time low of 90.63 against dollar: What is weighing on the currency

The Indian rupee fell to an all-time low against the US dollar on Monday (December 15), pressured by persistent foreign fund outflows and lingering uncertainty around US-India trade negotiations.

The currency weakened to 90.63 per dollar in early trade, breaching its previous record low of 90.55 touched on December 12.

On a year-to-date basis, the rupee has declined about 5.6%.

Market participants pointed to a combination of structural and near-term factors weighing on the currency. The absence of clarity on a US trade deal has dampened sentiment, while capital flows have remained weak amid sustained foreign selling of Indian equities and bonds. At the same time, a widening trade deficit has added to pressure on the external balance.

Currency traders also flagged imbalances in dollar demand and supply.

Expectations of further depreciation have encouraged importers to increase hedging activity, while exporters have remained cautious in bringing dollar inflows to the market, tightening near-term liquidity.

The Reserve Bank of India (RBI) has intervened intermittently in recent months to smooth volatility, but traders said its presence appeared less aggressive after the rupee moved beyond the 88.80 level.

Broader risk sentiment also remained fragile. Asian equity markets edged lower, tracking declines in US stocks late last week. While most regional currencies have so far avoided sharp moves, traders said the rupee remains more vulnerable due to domestic flow pressures.

Attention this week will turn to major global central bank decisions and delayed US macroeconomic data. The Bank of Japan is widely expected to raise interest rates, while the Bank of England is seen cutting rates. Investors are also awaiting key US indicators, including jobs data and inflation figures, which could influence dollar movements globally.

-With Reuters inputs