Rupee breaches 90/USD: Currency hits fresh record low as foreign fund outflows continue; US-India trade deal remains uncertain

On Tuesday, the Indian unit hit the psychological 90-dollar level in intraday trade before settling 43 paise down at an all-time low of 89.96 against the US dollar, largely owing to continued short-covering from speculators and sustained importer demand for the American currency.

Forex traders said multiple pressures, like foreign fund outflows from equities and lingering uncertainty over the Indo-US trade deal, are keeping investor sentiment fragile.

A Bloomberg report stated that India remains one of the few major economies that has not yet finalised a trade agreement with the US, although officials are optimistic about concluding one soon.

"In the meantime, steep 50% tariffs on Indian goods have weighed on exporters, while strong imports have kept dollar demand high and added pressure on the rupee. Together, these pressures have played a role in widening the country’s current-account deficit in the September quarter," the report said.

At the interbank foreign exchange market, the rupee opened at 89.70, then lost its ground and fell to a record intraday low of 90.00 against the US dollar, down 47 paise over its previous close.

At the end of trade on Tuesday, the rupee settled at a record low of 89.96 against the greenback, down 43 paise over its previous close.

On Monday, the rupee depreciated by eight paise to close at 89.53 against the US dollar.

What Niti Aayog Vice Chairman Rajiv Kumar said on rupee depreciation

The rupee depreciation against major world currencies is good for the economy, as it encourages labour-intensive exports from India, increases foreign exchange earnings, and generates more jobs, former Niti Aayog Vice Chairman Rajiv Kumar said on Tuesday.

The eminent economist further said it is high time that a so-called 'strong rupee' is seen as the symbol of economic strength.

"Nothing to worry about with the rupee depreciating against major world currencies. In fact, it is good for the economy, as it encourages labour-intensive exports from India, increases foreign exchange earnings, and generates more jobs," Kumar said in a post on X.

"The macho rupee syndrome should be discarded immediately. Let’s try and change this public narrative, which is detrimental to the country," Kumar added.