Rupee Plunges to 91: What This Means for Your Investments & the India-US Trade Deal

Will the Indian rupee's sharp decline to 91 against the dollar have a lasting impact on your investments? What does this mean for the India-US trade agreement, and how will it affect the overall economy? The rupee's recent slump has sparked concerns among investors and traders, with many wondering what's driving this trend.

The Indian rupee has weakened by 36 paise, crossing the 91-per-dollar level for the first time in intraday trade, due to continued foreign institutional investor (FII) outflows and uncertainty surrounding the India-US trade agreement. Over the past 10 trading sessions, the currency has declined from 90 to 91 against the dollar.

Understanding the Rupee's Decline

The Reserve Bank of India's (RBI) sizeable short USD forward position has shifted intervention away from the spot market, reducing its willingness to sell dollars aggressively in spot, leaving the rupee more exposed to flow-driven pressure. Foreign portfolio investors (FPIs) have been net sellers in Indian equities, worth over $18 billion so far in 2025, making India one of the worst-hit markets in terms of portfolio outflows.

Impact on the Indian Economy

A softer rupee can support companies with significant overseas revenue exposure, especially technology exporters. An index tracking IT stocks has gained roughly 14% since the end of September, coinciding with the period of accelerated currency depreciation. However, a decline in the rupee can also lead to higher import costs, potentially affecting inflation and economic growth.

What Should Traders / Investors Do Now?

• Intraday traders: Keep a close eye on the rupee's movement and its impact on stock prices, especially in the IT sector.
• Short-term traders: Consider the potential effects of the India-US trade agreement on the rupee and adjust your trading strategy accordingly.
• Long-term investors: Focus on companies with strong fundamentals and a competitive advantage in the global market, as they are more likely to benefit from a softer rupee.

Frequently Asked Questions

• Will the Nifty fall after this news? The impact of the rupee's decline on the Nifty will depend on various factors, including the performance of individual stocks and the overall market sentiment.
• Is this good or bad for bank stocks? A softer rupee can lead to higher import costs, potentially affecting inflation and economic growth, which may have a negative impact on bank stocks.
• What should retail investors watch next? Keep an eye on the India-US trade agreement and its potential impact on the rupee, as well as the performance of individual stocks and the overall market trend.

Follow the conversation on Twitter using #RupeeDepreciation and #IndiaUSEconomy. As the situation unfolds, it's essential to stay informed and adapt your investment strategy accordingly.