The US dollar is dominating the currency markets and has pushed the Indian rupee to a lifetime low, despite the DXY index sending weak signals and trading below 100. The Indian rupee fell to a fresh low of 89.62 on Friday but briefly recovered to 89.26 on Monday’s opening bell. The INR was down 0.9% on Friday, its biggest single-day decline since May.
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Currency Market: Indian Rupee Nearing 90 Against the US Dollar
The rupee is now only a stone’s throw away from plunging to the 90 mark against the US dollar in the currency markets. It comes after a bout of portfolio outflows, uncertainty over the US-India trade deals, and a pullback from the Reserve Bank of India’s (RBI) defensive stance. The RBI has intervened when the INR was down to safeguard the currency, but stepped back this time around.
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“There were large custodial outflows, and stop-losses got breached. With the central bank not intervening (near 88.80), the depreciation became all the more pronounced,” a trader at a large foreign bank said to Reuters. In addition, foreign investors have already withdrawn $16.5 billion from the Indian stock market in 2025. This is making the rupee weaker in the currency market while the US dollar gets a boost.
The rupee is among the weakest currencies in 2025 against the US dollar. It has dipped nearly 4.5% year-to-date and is unable to beat the USD despite it not being bullish this year. Only if the trade deal goes in favor of India, the local currency could gain this year. “A lot now depends on the trade deal. A favourable one can bring USD/INR down materially,” said Dhiraj Nim, an FX and rates strategist at ANZ. He added that “the RBI seems to be relenting to a market that has been short INR for quite some time.”