Mumbai – Uncertainty over the timing of the US.–India trade deal is fuelling rupee volatility and the absence of a quick agreement could push the currency to as low as 92 per dollar, the head of treasury at HDFC Bank said.
The rupee fell to an all-time low of 90.42 on Thursday, extending an eight-month-long slide that has made it Asia’s worst-performing currency. Multiple headwinds, from a wider trade gap to weak investment flows, have sapped dollar inflows into the world’s fifth-largest economy.
“The current account deficit is increasing, there are outflows from local equities so in the genuine supply side (of dollars) there is an issue which is coming in,” said Arup Rakshit, group head of treasury at HDFC Bank, India’s biggest private lender by market capitalisation.
Economists at the bank expect India’s current account deficit to worsen to 1.4% of GDP in the second half of fiscal year 2026, from 0.8% in the first half. Foreign investors, meanwhile, have pulled out $17 billion from local stocks this year so far.
“If the trade deal with the U.S. happens in the near future, then the rupee may quickly stabilise. Else the rupee could hover between 90 and 92,” Rakshit said.
The South Asian currency has declined more than 5% over the year so far, even as India’s economy held strong, underscoring the divergence in the country’s external and domestic sectors.
“The market is also waiting to see how the monetary policy committee reacts, whether there is a rate cut or not because that can also have its own challenges with the currency,” Rakshit said. The Reserve Bank of India is slated to announce its decision on Friday.
While economists had anticipated a rate cut by the central bank, traders in the rupee swaps market have scaled back wagers on policy easing following the rupee’s slide.
Published on December 4, 2025
