The Indian rupee weakened beyond the 91-per-dollar mark for the first time on Tuesday, pressured by rising hedging demand and persistent foreign portfolio outflows, as a prolonged stalemate in US-India trade negotiations continued to weigh on market sentiment.
The currency fell 0.3 per cent to 91.0750, marking a record low for the fourth consecutive session. The rupee had breached the 90 level earlier this month and is now down over 6 per cent year-to-date, making it the worst-performing currency in Asia so far in 2025.
Analysts attribute the weakness to steep US tariffs on Indian exports, which have dampened trade prospects and accelerated capital outflows. Overseas investors have net sold more than $18 billion worth of Indian equities this year, putting the market on track for its largest annual foreign outflows on record.
Reflecting the pressure, India’s benchmark indices—the BSE Sensex and Nifty 50—were both down around 0.6 per cent in early trade.
Traders said the rupee was also weighed down by the maturity of positions in the non-deliverable forwards (NDF) market, though dollar sales by state-run banks—likely on behalf of the Reserve Bank of India (RBI)—helped curb sharper losses.
The rupee is now down over 8.5 per cent from its 2025 peak of 83.77 recorded in May. Analysts believe a sustained recovery is unlikely unless there is a clear breakthrough in trade talks between India and the United States.
“The path of least resistance remains higher for USD/INR given ongoing tariff uncertainty, though chasing further gains at current levels may be risky,” MUFG said in a note.
India’s central bank has indicated it is prepared to tolerate a weaker currency as the external sector faces multiple headwinds. However, some relief has come from a rebound in exports and resilient economic growth. Shipments to the US rose 21 per cent year-on-year in November, helping narrow India’s merchandise trade deficit to a five-month low of $24.53 billion.
India’s trade secretary said on Monday that discussions with the US are ongoing, with efforts underway to conclude a trade agreement “sooner than later.”
