The Indian Rupee (INR) has fallen to an unprecedented low of ₹90.70 per US Dollar, breaching its previous records. This significant depreciation is being fueled by a potent mix of economic uncertainty, high demand for the dollar, and consistent capital flight from Indian markets.
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Let’s be real, this continuous slide is alarming for importers and those dealing with dollar-denominated goods.
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The Three Main Pressures on the Rupee
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Trade Deal Uncertainty: Despite close negotiations for a framework deal and a comprehensive bilateral trade agreement (BTA), a concrete announcement has not been made.
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The US Stance: Deputy USTR Jamieson Greere called the proposed Indian deal “a hard but to crack.”
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India’s Stance: Commerce Minister Piyush Goyal insisted trade deals should not be rushed with deadlines.
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Sustained Capital Outflow: Foreign Institutional Investors (FIIs) have been net sellers in the Indian equity market, pulling out ₹17,821 crore between December 1 and December 15.
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The Vicious Cycle: As the Rupee depreciates, the dollar returns for FIIs shrink, incentivizing them to pull out more money, further weakening the currency.
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Demand-Supply Imbalance: High dollar demand from importers and persistent capital outflows are creating a significant demand-supply imbalance that the currency is failing to withstand, despite an improved trade deficit.
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Market Snapshot
| Indicator | Status/Value | Context |
| Rupee (INR) | ₹90.70 per USD (New Low) | Opened at ₹90.5 and hit a low of ₹90.79 before recovering slightly to close the day. |
| Dollar Index (DXY) | 98.32 (0.08% Lower) | The Dollar’s overall strength was slightly down, highlighting the specific weakness of the INR. |
| FII Activity | Sold ₹1,114.22 crore on Friday | Continued net selling adds pressure on the currency. |
| Forex Reserves | $687.26 billion (Up $1.033 billion) | Despite the small jump in RBI’s reserves, market sentiment remains bearish on the Rupee. |
The market is anxiously awaiting the conclusion of the US-India negotiations, as high import duties currently hurt Indian exports to America. And then Y followed (The weakness persists despite the Commerce Minister’s call for patience, leaving the market highly vulnerable)…..
(With Inputs from multiple news portals)
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