MUMBAI: The rupee fell to a record low Monday for the fourth consecutive day breaching 90.75 intraday, pressured by a prolonged deadlock in Indo-US trade talks and sustained foreign outflows from domestic equities and bonds which is nearing $19 billion year-to-date. Analysts are expecting the unit to hit 92 sooner and the unit closed the day at 90.72—an all-time low.
Crossing the 90 mark is particularly significant for the rupee, as it represents just 50% of the value the currency had in 2011.
The rupee weakened 0.34% to 90.75 against the dollar, eclipsing its previous all-time low of 90.55 hit last Friday, making the plight of the rupee closer the 2022 plunge and continuing to being the worst among its Asian peers losing a shade less than 6% year-to-date.
At the interbank foreign exchange Monday, the rupee opened at 90.53, then lost ground and fell to a record intra-day low of 90.75, registering a 26-paise decline from its previous close. On Friday, the rupee had slipped 17 paise to close at an all-time low of 90.49.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.02% lower at 98.37.
The rupee pain continued despite the equities market making a smart recovery towards close from the deep cuts in till noon.
This year alone, the currency has slipped close to 6% against the dollar, making it the third worst performer among 31 major global currencies, just behind the Turkish lira and the Argentinian peso, while the dollar has lost more than 7% this year.
However, seeing the steep fall in opening trade, RBI was seen in the market throughout, helping it avoid steeper losses, traders said.
The two key reasons for the continuting bleeding of the rupee is the still missing trade deal with the US and the continuing fund outflows from the equity and debt market. Overseas investors have net sold stocks worth close to $19 billion so far in 2025, making the country one of the worst-hit markets in terms of portfolio outflows. Foreign investors have net sold bonds worth over $500 million in December. The selloff began in October 2024 and is still continuing with almost all months seeing net outflows barring a few months.
Another reason is the rising trade deficit, though November data saw its improving from the record low of $41 billion on October to $24.5 billion as gold imports crashed.
"The next support for the rupee is at 90.80, after which we could see a crossover of 91 towards 92. The RBI has clearly let the market to determine the price and has been intervening only to control any excessive volatility," said Anil Bhansali, head of treasury at Finrex Treasury Advisors.