Rupee hits ₹90/dollar as economy awaits U.S.-trade deal

The rupee fell 0.4% to close at an all-time low of ₹90 per dollar as the economy awaits clarity on trade deals and communication from the regulator and government.

The rupee opened nearly 0.1 paise lower than psychological levels and hit a high of ₹90.3 before ending the day softer.

Experts say the depreciation is a result of the delay in the US-India trade deal and the tactics of Indian regulators in handling it.

“A slipping rupee is not a weak rupee even if it crosses the psychological barrier of ₹90,” state-owned bank SBI said, suggesting the government thinks all is well.

Experts blame the delay in clarity about the trade deal with the US. “The trade deal has not happened and we have been waiting for it for the last 6-7 months. The market has not taken the trade deal into consideration,” said Anil Kumar Bhansali, head of treasury at Mumbai-based forex advisory firm Finrex Treasury Advisory. Another reason for this uncertainty is the “lack of communication” from the monetary and fiscal authority in explaining the depreciation.

The rupee’s decline should also be seen in the backdrop of foreign investors selling Indian stocks and looking to the US, Europe, Korean and Japanese equity markets. This leads to flight of dollar and thus increase in supply of rupee which reduces the value of rupee. The fall in the value of the rupee means that when foreigners buy Indian goods they have to pay higher prices.

However, the price impact of the expensive dollar is small for Indian consumers as the share of imports in the consumer price index basket is quite small, said Madan Sabnavis, chief economist at Bank of Baroda. Further, he said that under normal circumstances depreciation of up to 4% is not a cause for concern and there is no need to panic even if depreciation is 4% to 4.5% by November 2025. Just a few months ago, the rupee had hit a low of ₹88.73 per dollar and the RBI had sold small amounts of US dollars from its reserves to arrest this depreciation. Mr Sabnavis believes that the central bank under Governor Sanjay Malhotra has been less interventionist than his predecessor.

Anindya Banerjee, currency research analyst at Kotak Securities, reiterated this, saying: “Between FY23 and FY25, the RBI bought and sold an average of $42-43 billion monthly. From April to September, we have 6 months of data, we traded around $10.5 billion on an average.”

Both Mr Sabnavis and Mr Banerjee agreed that the cheaper currency would support exporters against the backdrop of US tariffs.

However, rupee traders do not like this method of currency management very much. Shri Bhansali said that depreciation does not improve exports but only increases their value.

The outlook for the rupee is that on technical levels, the rupee will test ₹92 to ₹92.5 levels and if it does not breach it, it may rise to ₹88 per dollar, Mr Bhansali said.

Mr Banerjee shared this sentiment, saying growing weakness in the US economy could mean the dollar could decline and this could be an opportunity for the rupee to appreciate in 2026. “This is the topic for next year 2026,” he said.