The Indian rupee’s slide past Rs 90 per US dollar for the first time ever has shifted sentiment in the equity market and raised fresh concerns for investors.
The breach of this psychological level has come on the back of weak capital flows, steady demand for dollars from importers, and uncertainty around the India–US trade agreement, reported ET.
The currency touched Rs 90.43 on Thursday, marking its fifth straight day of losses despite the Reserve Bank of India’s rreported interventions. Although it appreciated by 26 paise to close at 89.89 on Thursday.
Why the fall beyond 90 matters
Currency traders cited by Reuters said that once the rupee slipped past Rs 88.80, a level the RBI had been defending, the currency became more sensitive to long-standing pressures such as soft capital inflows and a rise in speculative positions.
Anindya Banerjee of Kotak Securities was quoted by ET as saying that the move toward Rs 90 was driven by short-covering and importer demand, calling the 90-mark a “major psychological barrier” reinforced by buy-stop orders.
“If the pair starts sustaining above this zone, the market could quickly shift into a higher trending phase toward 91.00 or even higher,” he said.
Banerjee also pointed to foreign portfolio investor outflows, early signs of unwinding yen carry trades, and the delayed Indo-US trade deal as factors weighing on the rupee.
A clear close above 90, he said, could encourage fresh speculative flows.
Investor sentiment takes a hit
The currency’s decline has already begun affecting domestic equities.
As per ET, Dr VK Vijayakumar of Geojit Investments said the Nifty’s roughly 300-point correction from its record high has more to do with technical adjustments, including changes in Bank Nifty weightage, but warned that “continued depreciation in the rupee” is prompting FIIs to sell despite strong fundamentals such as rising corporate earnings and robust GDP growth.
He added that the rupee could stabilise once the long-awaited India-US trade deal is sealed, possibly this month.
Market watchers say the rupee’s direction will have a direct bearing on import costs, inflation trends, and foreign portfolio flows.
Weakness in the currency could push up costs for sectors dependent on imported goods—such as petroleum, electronics, and gems and jewellery—putting pressure on margins.
However, Chief Economic Adviser V Anantha Nageswaran said on Wednesday that the recent fall has not affected inflation or exports, as per PTI.
What lies ahead for the Rupee
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Emkay Global expects the rupee to trade between Rs 88 and Rs 91 for the rest of FY26, noting that it has been far weaker than its Asian peers this year.
The brokerage said currency movements will hinge on the outcomes of the US–India and US–RoW trade deals.
On Thursday, the rupee briefly recovered to Rs 89.89, supported by a softer US dollar and possible RBI intervention, PTI reported. Earlier in the day, it had hit another record low of Rs 90.43 amid foreign selling and firm crude oil prices.
Analysts say elevated oil prices, fragile investor sentiment and persistent FII outflows may keep the rupee under pressure, although a weaker US dollar and the possibility of a Federal Reserve rate cut in December may offer some relief.
With the currency hovering around a level last seen never before in Indian markets, investors remain on edge.
Analysts warn that without clear intervention or a breakthrough on the trade front, speculative momentum could push the rupee toward Rs 91, making the coming weeks critical for D-Street.
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