Rupee breaches 91 level turns weakest asian currency in 25

Rupee breaches 91 level turns weakest asian currency in 25

With India’s growth strong and inflation contained, policymakers may be ‘comfortable’ allowing some depreciation, currency experts opined

The rupee on Tuesday breached one more psychological mark by depreciating beyond 91 to 91.14 on the spot market against the U.S. dollar during intraday trade, making it one of the weakest major currencies globally this year and the weakest in Asia in 2025.
But it gained a bit during the day to close at 90.93 as compared with it’s previous close of 90.78, down nearly 16 paise, a fresh all time low.
Anindya Banerjee, Head Currency and Commodity Research, Kotak Securities, said the pressure on the currency is being driven by three key factors: sentiment, capital flows, and the global macro backdrop. “The uncertainty around the pending India-U.S. trade deal and the broader trade-war environment is weighing on markets. From a flows perspective, foreign portfolio investors have pulled out close to $2.7 billion in the first two weeks of December alone, already among the largest monthly outflows this year, with the month still unfinished,” he said.
He said globally rising U.S. bond yields and expectations of a Bank of Japan rate hike have triggered an unwinding of the yen carry trade.
“This has led to risk aversion across equities, credit, crypto, and some commodities, adding speculative pressure on emerging-market currencies, including the rupee,” he added. Stating that the rupee may head towards 92, he said, RBI’s relatively limited intervention so far appeared deliberate.
“With India’s growth strong and inflation contained, policymakers may be comfortable allowing some currency depreciation, especially in a global trade-war environment where a weaker currency can support export competitiveness,” he said.
“And on a day when the rupee has reached 91, I think it is important to also flag that we have been expecting [it] for a while, but not wide depreciation. And there are strategic and tactical decisions involved in the rupee,” said Neelkanth Mishra, Chief Economist of Axis Bank, Head of Global Research at Axis Capital, and part time member at the Prime Minister’s Economic Advisory Council (PMEAC).
“I think the RBI is letting the currency move around a bit. It’s not a bad idea. We will have to see at what level they [would say] in the three-to-six-month basis, more than this volatility is not allowed. I think the mistake was in pegging it [rupee to $] at 83. Those past sins are still haunting us,” he emphasised.
In a note, Finrex Treasury Advisors said the rupee made a new lifetime low as dollar buying continued with news that U.S. President Donald Trump had not agreed to the new proposals as he wanted agri and its products to be included in the proposal which India had not agreed to.