Rupee falls 16 paise to 90.05 against U.S. dollar post RBI’s monetary policy decision

The rupee, which opened on a positive note, lost its early gains and breached the psychological level of $90 after the Reserve Bank on Friday (December 5, 2025) cut the key benchmark interest rate for the first time in six months.

Forex traders said the Reserve Bank of India (RBI) rate cut will push the rupee further down unless foreign portfolio investors return in a big way.

The RBI on Friday cut key benchmark interest rates for the first time in six months and took steps to boost liquidity to support the “Goldilocks” economy amid higher US tariffs.

At the interbank foreign exchange market, the rupee opened at 89.85 against the US dollar and touched 89.69 in morning deals, registering a gain of 20 paise from its previous close.

After the RBI monetary policy announcement, the rupee weakened and fell to 90.05 against the US currency, a fall of 16 paise from its previous close of 89.89. The currency has fallen about 5 percent against the dollar this year, the worst performance in Asia.

Reserve Bank Governor Sanjay Malhotra said the central bank does not target any band for the rupee in the foreign exchange market, and allows the domestic currency to find its right level.

Read this alsoAnalysts say that with a sharp fall, the rupee, Asia’s worst performing currency, may fall to 90.

“We do not target any price level or any band. We allow the market to determine prices. We believe that the markets, especially in the long run, are very efficient. It is a very deep market,” he said while responding to a question on rupee depreciation at the post-monetary policy press meet.

Mr Malhotra said markets are volatile and the RBI always endeavors to mitigate any unusual or excessive volatility. “And we will continue to make that effort,” he said.

In its bi-monthly monetary policy, the RBI this month announced three-year USD/INR buy-sell swaps worth $5 billion.

Asked if it was aimed at stemming the rupee’s decline, Malhotra said, “It is a liquidity measure. It is not meant to support the rupee.”

Emphasizing that the RBI does not target any level of the rupee against the dollar, he said the central bank “allows the rupee to find its right position, the right level”.

The Governor further said that the country has adequate foreign exchange reserves and the current account is manageable, and given the strong fundamentals of the economy, the country should see strong capital inflows going forward.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.02 percent lower at 98.97.

Global oil benchmark Brent crude fell 0.17% to $63.15 a barrel in futures trade.

On the domestic equity market front, Sensex was up 488.75 points at 85,754.07, while Nifty was up 163.25 points at 26,197.

According to exchange data, foreign institutional investors sold equities worth ₹1,944.19 crore on a net basis on Thursday (December 4, 2025).