Rupee slide no worry, will recover next year, says CEA Nageswaran after it breached the 90-per-dollar mark

Chief Economic Adviser (CEA) to the Government V Anantha Nageswaran on Wednesday said the government is not “losing sleep” over the rupee breaching the 90-per-dollar mark, asserting that the currency’s slide has not meaningfully affected either inflation or export competitiveness. Speaking on the sidelines of a CII event, he acknowledged the recent volatility but expressed confidence that the rupee “should improve next year.”

The comments came on a day when the Indian currency extended its decline, slipping to Rs 90.30 per dollar in intraday trade—its weakest level on record. The rupee opened at Rs 89.96 on Wednesday and fell to Rs 90.15, before touching a deeper low amid sustained selling pressure. The currency has now depreciated nearly 5% in 2025, reflecting a mix of global and domestic factors.

Analysts attribute the latest leg of the slide to uncertainty around the India–US trade deal, muted intervention by the Reserve Bank of India (RBI), and continued foreign investor outflows. The central bank has largely stayed on the sidelines in recent sessions, allowing market forces to dictate movement. This vacuum, analysts say, has added to skittish sentiment.

Equity markets, too, have reacted to the rupee’s weakness. The Sensex has slipped nearly 1% over the past week, hitting a low of 84,763.64 on Wednesday, down about 0.4% from the previous close. Weakness across import-heavy sectors and sustained global risk-off sentiment also weighed on the index.

Multiple headwinds, little support

Market experts say the rupee’s troubles stem from a cluster of pressures hitting simultaneously. Madan Sabnavis, Chief Economist, Bank of Baroda, said the fall is being driven by FPI outflows, a likely widening of the trade deficit, and slowing exports. “The dollar index is below 100, so the rupee should ideally be firm. But RBI appears largely silent on intervention,” he said. This is reinforcing sentiment-driven depreciation, he added, cautioning that while exporters may benefit at the margin, “it is not good news for importers or inflation.”

Sabnavis noted that once the rupee breaches a key level and stays there for a few days, the market treats it as the “new benchmark.” He said traders are talking about a move toward 91, but expects a potential correction back to 88–89 levels after the RBI’s policy announcement.

Jateen Trivedi, VP – Commodity and Currency Research at LKP Securities, said the absence of concrete progress on the trade deal is weighing heavily. “Markets now want concrete numbers rather than broad assurances,” he said, adding that record-high metal and bullion prices have inflated India’s import bill. Muted RBI action has also allowed depreciation to accelerate. Trivedi said the rupee is “deeply oversold” and must reclaim ₹89.80 for any meaningful recovery.

Corporate leaders sound caution

Amid the turmoil, corporate voices are urging businesses to prepare for a more demanding environment. Uday Kotak, MD & CEO of Kotak Mahindra Bank, said Indian companies must “shake out of their comfort zone.” Citing persistent FII and private equity selling, he wrote on X: “₹@90… Time will tell who is smarter. For now, foreigners seem smarter… This is a long game.”

Despite the rupee’s slump, the government maintains that the currency remains broadly stable on real-effective terms—and expects macro fundamentals to support a recovery in 2026.