Rupee at record low: The Indian rupee hit a fresh lifetime low against the US dollar on Monday, December 1, nearing the 90 per dollar mark, as persistent portfolio outflows and uncertainty around the — including tariff-related tensions — have all weighed on market sentiment.
The rupee declined to a fresh low of 89.83 against the greenback, slipping past its previous record low of 89.49 hit about two weeks ago.
This fresh bout of selling in the also weighed on the Indan stock market, as benchmark indices slipped from record high levels into the negative terrain.
Bankers, told Reuters, that robust Indian economic growth has offered little respite to the rupee, which remains pressured by the lack of progress on a US-India trade deal.
While the real in the second quarter exceeded expectations, the nominal print was modest at 8.7%.
Anindya Banerjee, Head Commodity and Currency, Kotak Securities, said that domestically, India’s real GDP growth remains strong, but nominal growth has slowed to multi-year lows because inflation has stayed unusually subdued.
Economists at DBS Bank and Kotak Mahindra Bank flagged the low nominal GDP growth in the data that came out on Friday evening. Kotak Bank’s Upasna Bhardwaj said the single-digit nominal GDP growth continues to signal tepid underlying activity.
Why is rupee falling?
Analysts believe that a combination of a sharp widening , heavy foreign investor outflows and greater tolerance for two-way exchange-rate moves has driven the rupee’s underperformance.
India saw highest-ever trade deficit of $41.7 billion in October 2025. This widening deficit was driven largely by a dramatic surge in gold imports, which nearly tripled to $14.7 billion, and a sharp 28% decline in exports to the US to $6.3 billion in October versus May.
Meanwhile, the foreign portfolio outflows swelled to $16,394 million this year, with $425 million sold last month.
Riya Singh, Research Analyst, Commodities and Currency, Emkay Global Financial Services, told Mint that a rebound of strength in the also impacted our home currency, with trade uncertainties still overhanging.
Can rupee fall past 90/dollar mark?
The weakness in the rupee this year has not only made it among Asia’s weakest performers, but placed it precariously close to the psychologically important 90 per dollar mark. Analysts believe that with the current macro set-up, a fall below this level is inevitable.
The 90 level is largely a psychological threshold, said Banerjee. “If capital outflows persist and global risk sentiment remains weak, the rupee can certainly retest and even cross it. However, any move beyond 90 would make the currency even more undervalued relative to its fundamentals,” he added.
Singh, too, believes the balance of risk into year-end is skewed toward testing the 90 mark.
If policy support returns, such as continued active forex intervention by the central banks and a credible improvement in export sentiment, the market can be capped below 90; conversely, a prolonged delay in repairing trade frictions or fresh capital flight could push the spot past 90, she added.
The (RBI) sold a net of $7.91 billion in the foreign exchange market in September, the latest RBI data shows. Recently, RBI Governor Sanjay Malhotra had said the rupee’s pressure would ease once India signs a “good” trade deal with the US.
What could be the impact of weak rupee on economy & market?
Explaining the impact of a weak rupee on the economy and the Indian stock market, Singh highlighted three major impacts:
1. Inflation from imports
Higher import bills from top importing items like energy, intermediates, and gold, which can raise headline import costs and compress margins for import-dependent manufacturers.
2. Corporate profits and capital flows
The overseas investors may demand higher risk premia, prompting portfolio outflows and pressuring equity valuations.
3. Policy trade-offs
The central bank may need to intervene more, draining usable reserves or tightening domestic liquidity if it raises rates to defend the currency.
Meanwhile, Banerjee doesn’t see an impact on the consumer economy of the weak rupee, as he said that “with inflation running at very low levels, a weaker rupee is not a major threat to the consumer economy. In fact, it can be a net positive for exporters.”
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.