India's Rupee Hits Record Low

The Indian rupee has fallen to a record low, exceeding the 90-per-dollar mark. This decline makes it Asia's worst-performing major currency, with a loss of over 5% in 2025.

US-India Trade Negotiations: A Key Factor

The ongoing US-India trade negotiations are a significant factor in the rupee's downfall. The lack of progress in these talks has hurt the local currency and stocks. Foreign investors have sold $18 billion of Indian stocks in 2025, making India one of the worst-hit markets in terms of portfolio outflows.

Consequences of the Decline

The rupee's decline has severe consequences for India's economy. The country's exports to the US have been hurt by US tariffs of up to 50% on Indian goods. This has diminished the appeal of local equities and contributed to the rupee's decline.

Central Bank Intervention

The Reserve Bank of India (RBI) has intervened to slow the rupee's decline. However, the RBI is likely to tolerate a weaker rupee as the country's external sector faces multiple headwinds, including a record October goods trade deficit and muted capital inflows.

What's Next for the Rupee?

Analysts expect the rupee to stay in a downtrend in the near term. The next level to watch is 90.70. A breakthrough in the US-India trade negotiations is key for a reversal in the rupee's fortunes. India's chief economic adviser expects the deal to be signed by March.

Key Facts:

The Indian rupee has fallen over 5% against the dollar in 2025.
Foreign investors have sold $18 billion of Indian stocks in 2025.
The rupee's 1-month realised volatility has risen to near 5.5%, its highest since July.

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