The on Wednesday breached the psychologically crucial 90 per mark, weighed down by factors such as continued FPI outflows from the equity markets, lack of clarity on a trade deal with the US, widening trade deficit, and restrained RBI intervention, among others.
The Indian currency, which opened weaker at 89.96 against its previous all-time-low close of 89.87, sank to an intraday low of 90.15 per US dollar in morning trade so far. The intraday high is 89.93 so far. The Indian unit is currently trading at 90.01 per USD.
Amit Pabari, MD, CR Forex Advisors, said, “For weeks, the RBI held the line at 88.80. Every time the market pushed, the central bank stepped in to protect that level.But on November 21, that defense quietly faded.”
“Once 88.80 was allowed to break, it became clear the RBI is no longer blocking every move — instead guiding the rupee through a controlled, gradual depreciation and stepping in only to prevent sharp swings.”
Pabari opined that for now, USD/INR is expected to trade between 88.90 and 90.20, with the 88.80–89.00 band continuing to act as a firm support zone.
“A clean break below 89.00 would be the first real sign that the rupee is finally ready to pull back and gather strength. Until then, 90 remains the wall to watch. It’s technical, it’s psychological, and it’s where the market wants to test the RBI’s resolve,” Pabari said.
Abhishek Goenka, Founder & CEO, IFA Global, said, “There is growing unease among market participants around delay in announcement of a trade deal between India and US. If the trade deal continues to remain elusive, rupee could act as a natural release valve.”
“Relatively weaker rupee would help soften the impact of tariff differential with peers to some extent,” he added.
He noted that RBI, it seems, is adopting a more soft touch approach to intervention given that it is already considerably short in forwards including NDF (non-deliverable forwards). It may, therefore, want to use its intervention power judiciously.
“RBI may protect 90 intraday but if it breaks, there could be a vertical move. There would be concentration of barriers around that level which can trigger frantic price action. Liquidity could dry up and offers could disappear,” said Goenka.
Dipti Chitale, CEO, Mecklai Financial Services, said the rupee’s slide beyond the 90 mark has increased hedging costs, with forward premiums jumping as both corporates and leveraged traders rushed to secure protection against further weakness.
“The 1-year USD/INR forward premium rose another 7 basis points (bps) on Tuesday — over 12 bps in just three sessions — while the 1-month tenor spiked to a seven-month high near 19.5 paisa.
“The move reflects a mix of genuine hedging demand and expanding speculative positions, underpinned by the growing perception that the RBI may allow a deeper adjustment after the currency broke below the previously defended 88.80 level,” she said.
Chitale expects the weaker-bias on the rupee to continue, though any progress on the US-India trade agreement could trigger sharp directional moves.
“Given the volatility, we advise corporate treasuries to adopt a cautious hedging stance to safeguard their budget rates. In the near term, 90.50 is expected to cap the upside, while 89.30 serves as immediate support, followed by 88.70 range,” she said.