Rupee Breaches 90 Again: Why The Currency Is Under Pressure Ahead Of RBI Verdict
Forex dealers said the RBI’s restrained intervention, combined with persistent dollar demand from importers, has kept sentiment under pressure.
- Indian rupee hit an all-time low against US dollar.
- Chief Economic Adviser sees no inflation or export impact.
- Global factors like dollar strength and oil prices pressure rupee.
The rupee weakened further on Thursday, slipping 28 paise to a fresh all‑time low of 90.43 against the US dollar in early trade, as foreign investors continued to pull out funds and the Reserve Bank of India (RBI) maintained a measured approach ahead of Friday’s crucial monetary policy announcement.
The currency opened at 90.36 at the interbank foreign exchange market before extending losses in the first hour of trade. On Wednesday, it had breached the 90‑per‑dollar mark for the first time, settling at a record 90.15, reported PTI.
Forex dealers said the RBI’s restrained intervention, combined with persistent dollar demand from importers, has kept sentiment under pressure.
Weak Rupee Not Hurting Exports
Even as the rupee continues its downward trajectory, Chief Economic Adviser V Anantha Nageswaran struck a reassuring tone. Speaking on Wednesday, he said the currency’s fall was not affecting inflation or exports, adding that while depreciation can aid outbound shipments, it tends to make imports costlier.
He also noted that import‑heavy sectors, including petroleum, electronics, and gems and jewellery, may feel the pinch due to higher input costs, which could influence inflation expectations.
Global Factors Keep Pressure Elevated
The dollar index, which measures the greenback against six major currencies, was trading 0.14 per cent higher at 98.99, signalling continued strength. Meanwhile, Brent crude rose 0.49 per cent to $62.98 per barrel in futures trading, offering limited respite to India’s import bill.
Market participants say the broader backdrop remains dominated by geopolitical uncertainty and ongoing trade friction with the US. With investors hoping for progress toward a settlement by the year‑end, volatility in the foreign exchange market is expected to continue.
“It seems that until the trade deal comes, we may see the rupee weaken further, and it may reach levels of 91.00 soon. With a weak rupee, we do not expect the RBI to cut rates on Friday,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
Markets Want Clarity
India’s recent macro readings have remained robust. GDP growth has surprised on the upside, and the HSBC India Services PMI climbed to 59.8 in November, supported by healthy new order flows, underscoring resilience in the broader economy.
But currency traders say growth data is not driving the market narrative right now. “The currency market isn’t trading on growth headlines anymore. It wants stability, clear policy guidance… and maybe a trade deal that doesn’t keep slipping away,” said Amit Pabari, MD of CR Forex Advisors.
He added that all eyes are now on RBI Governor Sanjay Malhotra, who will announce the Monetary Policy Committee’s decision on December 5. “Investors aren’t just listening to rate decisions. They want to hear his voice on the rupee.”
All Eyes On Friday’s MPC Decision
The six‑member MPC is meeting against a backdrop of falling inflation, strong GDP growth numbers, a rupee that just crossed 90, and persistent global tensions. Whether the RBI chooses to defend the currency more aggressively or maintain its current stance will be a key market trigger.
Despite the rupee’s sharp fall, domestic equities opened steady. The Sensex gained 45.99 points to 85,152.80, while the Nifty edged up 14.35 points to 26,000.35 in early trade.
On Wednesday, Foreign Institutional Investors (FIIs) sold equities worth Rs 3,206.92 crore, according to exchange data, another sign of cautious global sentiment.
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