Rupee hits new low of 90.56/$ on trade deal impasse; near-term pain seen

The Indian Rupee weakened to yet another low on Friday, hitting the 90.56 mark against the dollar, pressured by an impasse in a trade deal with the US and the selling of equities by global funds.

The domestic currency opened 6 paise lower at 90.42, but weakened further in opening deals to a record low of 90.56 against the greenback, according to Bloomberg data.

So far this month, the currency has fallen 1.15 per cent, while in the calendar year 2025, the unit is down 5.7 per cent, the worst among its Asian peers. The currency is heading for its worst year since 2022, when it fell 11 per cent.

The recent fall in the unit comes amid India’s widening current account deficit and lack of clarity in the US-India trade deal, according to analysts.

The dollar index has been softer, but that has not helped the rupee, which continues to weaken as foreign portfolio investors (FPIs) sell Indian equities and debt, with a trade deal still appearing distant, Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors, said.

With the rupee hovering near its all-time low, exporters are being advised to continue selling in cash, while importers are encouraged to buy dollars on dips, Bhansali said. "For the day, traders expect the rupee to move within a 90 to 90.60 band, with close attention on the Reserve Bank of India (RBI) intervention"

Today also marks the final day of talks between Indian officials and the visiting US delegation, and markets will be watching for any announcement on a potential deal, Bhansali said.

Indian Prime Minister Narendra Modi and US President Donald Trump held a telephonic discussion covering various aspects of the India-US relationship. Meanwhile, Chief Economic Advisor (CEA) V Anantha Nageswaran on Thursday said India and the US have ironed out “most of their pending differences” on trade, and that a formal agreement could be in place by March 2026.

The rupee is expected to fall to 91.50 per dollar over the next two to three months due to continued pressure from India’s widening current account deficit, Bloomberg reported, quoting Nuvama Institutional report. The currency is likely to weaken further as importer demand stays strong due to a rise in gold and silver prices, the analysts from the brokerage said. "Foreign outflows, lack of dollar sales by exporters continue to weigh on rupee as US trade deal seems to be in limbo."

Meanwhile, global funds have sold domestic equities worth ₹1.59 trillion so far this month, including ₹16,104 crore of outflows across all sessions in December.