Rupee breaches 91/USD on delay in US-India trade deal, FPI outflows

In the near term, the 90-level remains a key support, while 91.25 is an important resistance. A sustained break higher could open the door towards 92, he said.

The Rupee is breaching new lows every day (Representative image: AI).

The rupee slid past the 91-mark for the first time on Tuesday, closing at a record low of 91.03 against the dollar amid delays in finalizing India-US trade deal and continued outflows from foreign portfolio investors (FPIs).

The domestic currency ended at 91.03 against the US dollar, after hitting an intraday low of 91.08, compared to previous close of 90.73. The rupee took nine trading sessions to depreciate from 90 to 91.

“The rupee breached the 91 mark amid delays and hurdles in the India–US trade negotiations, particularly around India’s red lines on agriculture and dairy products. This weighed on market sentiment. The RBI’s planned USD 5 billion buy–sell swap further added to near-term pressure on the rupee,” said Dipti Chitale, CEO, Mecklai Financial Services Pvt Ltd.

In the USD/INR buy/sell swap auction, conducted on Tuesday, the RBI received a total of 222 bids worth $10.35 billion. The central bank accepted 118 bids worth $5.07 billion.

The absence of the Reserve Bank of India (RBI) in the market also contributed to the rupee’s fall to a fresh all-time low, dealers said.

“The RBI’s relatively limited intervention so far appears deliberate. With India’s growth strong and inflation contained, policymakers may be comfortable allowing some currency depreciation, especially in a global trade-war environment where a weaker currency can support export competitiveness,” said Anindya Banerjee, head currency and commodity research, Kotak Securities.

Earlier this month, RBI Governor Sanjay Malhotra played down the rupee fall and said the central bank was well placed on the currency front, stating that “this volatility does happen, can happen” and that the market is very “efficient” and “deep.”

Story continues below this ad

Withdrawal of funds by FPI also impacted the rupee. In December so far, foreign investors have sold equity worth Rs 17,242 crore through the exchanges, taking the total outflow in 2025 at Rs 1.61 lakh crore, according to the National Securities Depository Ltd (NSDL) data.

Globally, rising US bond yields and expectations of a Bank of Japan rate hike have triggered an unwinding of the yen carry trade. This has led to risk aversion across equities, credit, crypto, and some commodities, adding speculative pressure on emerging-market currencies, including the rupee, Banerjee said.

In the near term, the 90-level remains a key support, while 91.25 is an important resistance. A sustained break higher could open the door towards 92, he said.