The rupee slipped to 89.92 against the US dollar, breaching its previous record low of 89.7575 from December 1, and ending the day 0.3% weaker. Its decline accelerated on December 1 after the currency fell below 89.5 — a level the RBI had earlier defended — triggering stop-loss orders and prompting importers to rush into dollar purchases.
The fall was particularly striking because it came despite India’s strong GDP numbers and in the absence of negative cues from Asian markets. Equity indices were down around 0.5%. VK Vijayakumar of Geojit Investments noted that persistent rupee weakness is discouraging foreign inflows and suggested that a long-pending India–US trade deal could help stabilise the currency.
Economists expect India’s widening trade deficit to push the current account deficit higher this year. HSBC estimates it may rise to 1.4% of GDP from 0.6% previously. Analysts at MUFG believe underlying pressures could eventually push the rupee beyond 90. Kotak Securities’ Anindya Banerjee highlighted 90 as the next crucial level, with support between 88.80 and 89. Meanwhile, LKP Securities’ Jateen Trivedi said uncertainty over the US trade deal and limited RBI intervention in November have kept sentiment weak, leaving the rupee trading in the 89.35–89.90 range.
