Rupee Slumps Past 91 Against US Dollar

The Indian rupee slipped past the 91 mark against the US dollar on Tuesday, hitting a fresh all-time low for the fourth straight session, as uncertainty over an India–US trade deal and sustained foreign fund outflows weighed heavily on the currency.

The rupee fell to a record low of 91.03, surpassing its previous trough of 90.78 recorded a day earlier. The decline was driven by strong dollar demand, likely linked to the maturity of positions in the non-deliverable forwards (NDF) market, along with continued selling by foreign institutional investors. Over the past five trading sessions, the rupee has weakened by more than 1% against the greenback.

In 2025 so far, the rupee has emerged as Asia’s worst-performing currency, depreciating nearly 6% against the US dollar. Analysts attribute the sharp fall to steep US tariffs on Indian exports and the absence of a bilateral trade agreement. India remains the only major economy yet to finalise a trade deal with Washington, adding pressure to the currency.

The sustained slide in the rupee has begun to impact India’s equity markets, threatening the early stages of recovery in the $5.2 trillion stock market. The benchmark NSE Nifty 50 index has slipped around 1.7% from near-record highs seen in November, though it has recovered part of the losses. In December alone, global investors pulled out about $1.6 billion from Indian equities, reversing inflows seen over the previous two months, while also reducing exposure to domestic debt.

Market participants note that the sharpest US tariffs in Asia have dampened investor confidence as traders await clarity on trade negotiations. Persistent capital outflows, coupled with global uncertainty, have added to the pressure on the rupee.

While a weaker rupee poses challenges for the broader market, it has supported export-oriented sectors. Technology stocks, in particular, have benefited, with the Nifty IT index rising nearly 14% since the end of September, coinciding with the currency’s decline.

Experts suggest that sectors such as IT, pharmaceuticals, and metals tend to gain from a depreciating rupee, while banks, energy producers, and infrastructure companies face headwinds. Overall equity returns are expected to remain selective amid currency weakness, stable bond yields, and modest earnings growth.