The Indian rupee dropped to a record low on Tuesday, nearing the psychologically significant milestone of 90 rupees per dollar. It tested an intraday low of 89.95 before closing at 89.87, marking a decline of approximately 32 paise from its previous close of 89.5475.
Several factors are contributing to the rupee’s decline, including selling pressure from foreign portfolio investors (FPIs) in the equity market, demand from importers, short-covering by speculators, and delays in finalizing a tariff agreement with the United States. Additionally, speculation about a potential repo rate cut and diminished intervention from the Reserve Bank of India (RBI) have exacerbated the situation.
In the current calendar year, the rupee has depreciated roughly 5% or about 425 paise against the US dollar. According to Amit Pabar, Managing Director of CR Forex Advisors, the RBI’s lack of active defense of the currency is allowing it to decline further. “The RBI protected the 88.80 level for several days but permitted it to break on November 21. Since then, the central bank has intervened only sparingly to manage sharp fluctuations,” Pabar noted. He emphasized that this approach suggests the RBI is supporting a gradual depreciation while limiting excessive volatility.
The focus now turns to the 90-rupee mark, which is viewed as a crucial psychological and technical threshold. Anindya Banerjee, Head of Commodity and Currency at Kotak Securities, emphasized that sustained upward movement toward 90 is primarily driven by continued short-covering from speculators and robust importer demand. “If the pair starts maintaining levels above 90, the market could quickly shift to a higher trend, potentially reaching 91.00 or more,” Banerjee warned, underlining the need for the RBI to act to prevent excessive speculation.
Market analysts, including Pabar, suggest that the current trading range for USD-INR may settle between 88.90 and 90.20. Historical trends indicate that when the rupee breaches a significant level, it often stabilizes within a new range, as seen in past shifts from 81-83 to 83-85 and subsequently from 86-88.
As the market reacts to the rupee’s ongoing depreciation, stakeholders are closely monitoring how the RBI will manage the critical 90-rupee level in the coming days.
Published on December 2, 2025.
