USD vs INR: Rupee breaches 91-mark against US dollar for first time, down 6% YTD

USD vs INR: The Indin rupee plunged past the 91 per US dollar mark for the first time on Tuesday, pressured by sustained foreign portfolio outflows amid a deadlock in trade negotiations between the US and India.

The rupee fell 36 paise to breach the 91-mark. In the last 10 sessions alone, rupee has weakened from 90 to 91 per US dollar mark, with the domestic unit losing 1% against the US dollar in just five sessions alone.

The currency touched a low of 91.0750, hitting a record low for the fourth consecutive session. Meanwhile, in 2025 so far, Indian rupee has fallen more than 6% against the dollar so far in 2025, making it one of the worst-performing emerging market currencies.

While the likely maturity of positions in the non-deliverable forwards market put pressure on the rupee, dollar sales by state-run banks, most likely on behalf of the Reserve Bank of India, helped slow the slide, traders told Reuters.

Why is rupee falling?

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said, “Further sharp weakness in the rupee was not expected today since the November trade data has come better-than-expected.”

He added that covering of short positions may be a factor in today’s decline. Sustained FII selling is acting like a vicious cycle, pulling the rupee down, he said.

“Normally, when the rupee declines, the RBI intervenes by selling dollars to stem the decline of the rupee. But recently, the RBI’s policy has been to let the currency decline. Low inflation in India ( 0.71% in November ) is the reason for this non-intervention by the central bank. Rupee depreciation is not hurting the economy,” he noted.

India’s November trade deficit declined to $24.53 billion from 41.68 billion in October.

Meanwhile, analysts told Reuters that the fortunes of the rupee are unlikely to turn unless there is a breakthrough in US-India trade negotiations.

"The path of least resistance is still for USD/INR to rise from here given uncertainty around tariffs, but we are hesitant to chase USD/INR higher at these elevated levels," MUFG said in a note on Tuesday, as per Reuters.

Meanwhile, the US dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03% lower at 98.27.

On the domestic equity market front, the 30-share benchmark index, Sensex, declined 363.92 points to 84,849.44 in early trade, while the Nifty was down 106.65 points to 25,920.65.

(With inputs from agencies)

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