New Delhi [India], December 16 (ANI): The Indian rupee touched a historic low on Tuesday, breaching the 91-mark against the US dollar for the first time, highlighting mounting pressure on the domestic currency amid continued foreign fund outflows and weak capital inflows.
Market experts said the rupee has entered unfamiliar territory, making it difficult to predict how much further it could weaken in the near term. The decline comes against a backdrop of elevated global uncertainty and thin year-end trading volumes, factors that are contributing to heightened market volatility.
Currency expert K N Dey told ANI that the rupee has moved into uncharted territory, making future movements hard to assess. He noted that with year-end approaching, market participation is likely to remain low, even as volatility stays elevated. Dey added that even a potential revision of US tariffs may not provide significant relief to the rupee, and that fresh capital inflows are unlikely before mid-January.
Kishore Narne, Director and Head of Commodity at Motilal Oswal Financial Services, said a weaker rupee comes with clear trade-offs. He pointed out that currency depreciation raises imported inflation, particularly through energy and commodity prices, widens the current account deficit, and increases the cost of servicing dollar-denominated debt. At the same time, he said, a weaker rupee offers some relief to exporters by helping them absorb tariff pressures and subdued global demand.
Ajay Bagga, a banking and market expert, attributed the rupee’s fall to continued net outflows by foreign portfolio investors, subdued foreign direct investment inflows, and the lack of progress on the US trade deal. He said the Reserve Bank of India has largely remained on the sidelines despite the rupee’s sharp decline, even as the US dollar has weakened.
Bagga contrasted India’s currency performance with that of other Asian economies, noting that currencies such as the Thai baht have risen significantly this year despite political and economic challenges. He added that India, despite strong domestic consumption, stable macroeconomic conditions and large foreign exchange reserves, has seen the worst-performing currency in Asia in calendar year 2025.
Overall, experts believe the combination of foreign outflows, weak inflows, uncertainty surrounding the US trade deal and limited central bank intervention has pushed the rupee to a record low. While exporters may derive some benefit, the sharp depreciation has raised concerns over inflation, external balances and near-term market stability.
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