Record low! Rupee recovers slightly after breaching 91-mark for the first time; settle at 90.93 against US dollar

The rupee on Tuesday slid to a fresh record low, breaching the 91-per-dollar mark for the first time during intra-day trade, before recovering partially to end 15 paise weaker at 90.93 against the US dollar, amid persistent foreign fund outflows and uncertainty over India–US trade negotiations.

The domestic currency initially dropped as much as 36 paise to touch an all-time low of 91.14 against the greenback, before paring losses later in the session. The decline came despite weakness in the US dollar and sharp falls in global crude oil prices, currency traders said.

At the interbank foreign exchange market, the rupee opened at 90.87 against the dollar and moved in a wide range of 90.76 to 91.14 during the day, before settling at 90.93. The currency had closed at 90.78 on Monday.





Over the past 10 trading sessions, the rupee has moved from 90 to 91 against the dollar. The currency has declined by 1 per cent versus the US dollar in just five sessions.

Minister of state for finance Pankaj Chaudhary said the rupee’s depreciation in the current financial year has been driven by a widening trade deficit, evolving prospects linked to India’s trade agreement with the US, and relatively weak support from the capital account. “During the current financial year, the depreciation of the INR has been influenced by the increase in trade deficit and likely prospects arising from the ongoing developments in India's trade agreement with the US, amid relatively weak support from the capital account,” he said, as quoted by PTI.

Chaudhary added that a weaker currency can improve export competitiveness and have a positive impact on the economy, though it may also push up the cost of imports. “The depreciation of currency is likely to enhance export competitiveness, which in turn impacts the economy positively. On the other hand, depreciation may raise the prices of imported goods. However, the overall impact of exchange rate depreciation on domestic prices depends on the extent of the pass-through of international commodity prices to the domestic market,” he said.

Referring to data from the past 10 years since 2015, Chaudhary said the rupee has declined 5.1 per cent so far this year, up to December 3.

Currency traders suggest that the rupee could potentially exceed 92 against the dollar this month.

In interbank foreign exchange trading, the rupee began at 90.87 and fluctuated between 90.76 and 91.14 before closing at 91.01 (provisional), showing a 23 paise decline from its previous close.

The domestic currency had closed at 90.78 against the US dollar on Monday, recording a 29 paise decrease from its earlier close. "Rupee made a new lifetime low as dollar buying continued with news that (US President) Donald Trump has not agreed to the new trade proposals from India. So the deal goes into limbo till a new one is finalised," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, as quoted by PTI.

"FPIs will continue to sell while speculators will continue to take USD/INR up in the absence of RBI intervention... 92 looks imminent unless RBI has other ideas or a deal is finalised," he added, forecasting tomorrow's range between 90.75 and 91.25.

According to exchange data, foreign institutional investors divested equities worth Rs 1,468.32 crore on Monday.

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