Indian rupee plunges past ₹90, Asia’s worst hit
Experts say the rupee’s fall was fueled not just by foreign selling, but also by a sudden crypto crash, which sharply increased demand for the dollar.
Mumbai: The Indian rupee breached the symbolic 90-per-dollar mark on Wednesday, hitting a fresh all-time low of 90.07, down 19 paise from its previous close, as foreign fund outflows persisted and global crude oil prices remained elevated. The local currency’s slide has fueled concern among investors and policymakers alike, even as officials maintain that the weakening rupee is not an immediate cause for alarm.
Forex traders pointed to multiple factors behind the rupee’s sharp fall. Uncertainty over the India-US trade deal has left investors wary, while the Reserve Bank of India’s (RBI) limited intervention in the currency market has done little to stem the decline. The rupee opened at 89.96 against the US dollar in the interbank market on Wednesday, tumbled to a record intraday low of 90.30, and finally closed at 90.15 — marking yet another milestone in its downward journey.
The previous day, the rupee had already settled at a lifetime low of 89.96, slipping 43 paise amid continued short-covering by speculators and steady importer demand for dollars. Analysts said that the currency’s persistent weakness reflects broader global and domestic dynamics, including elevated crude prices, volatile capital flows, and the ongoing strengthening of the US dollar.
Speaking at an event on Wednesday, Chief Economic Adviser V Anantha Nageswaran sought to calm concerns over the rupee’s record slump. He emphasized that the slide has not significantly impacted inflation or export performance and expressed optimism that the currency’s position should improve over the course of the next year.
While the rupee’s record breach of the 90-mark may appear alarming at first glance, research from the State Bank of India’s Economic Research Department offered a measured perspective. Analysts noted that a falling rupee should not automatically be interpreted as a sign of weakness. Rather, it reflects structural factors and short-term market pressures that can be managed without disrupting macroeconomic stability.
The SBI report highlighted that the currency is likely to trade with a slight negative bias in the near term, driven by ongoing foreign institutional investor (FII) outflows and elevated crude oil prices. However, these pressures may be offset by a weakening US dollar and growing expectations of a potential rate cut by the Federal Reserve in December. Analysts suggested that the USD-INR spot price is likely to trade in a range of Rs 89.80 to Rs 90.50 in the near term, offering some cushion against more extreme swings.
The rupee’s decline has not gone unnoticed in the broader financial ecosystem. Market participants say that the slide, while psychologically significant, has been somewhat anticipated given recent trends in global capital flows. Foreign investors, in particular, have been cautious amid rising US interest rates, geopolitical uncertainties, and concerns over inflationary pressures in emerging markets like India.
In addition, domestic factors such as sustained importer demand for dollars to pay for oil, machinery, and other essentials continue to exert downward pressure on the currency. The combination of these external and internal factors has created a challenging environment for the rupee, testing the resilience of India’s foreign exchange reserves and currency management mechanisms.
Despite the negative headlines, officials remain confident in the long-term outlook. Nageswaran and other policymakers stress that a weaker rupee can provide certain benefits, such as boosting export competitiveness, while the economy remains fundamentally strong. Investors are advised to look beyond short-term volatility and focus on structural strengths in India’s macroeconomic framework, including stable inflation, a robust banking system, and strong foreign exchange reserves.
As India navigates this phase of currency turbulence, analysts and officials alike emphasize that vigilance, rather than panic, should guide responses. While the crossing of the 90-rupee threshold is symbolically significant, it is part of a broader pattern of currency adjustments reflecting global and domestic market realities. With expectations of softer US dollar trends and possible Fed rate cuts, the rupee may find some relief in the coming months, even as the near-term outlook remains cautious.