Rupee hits fresh record low against dollar; where is it headed?

Rupee on Monday tumbled to its fresh low against dollar on Monday, as delays in the US-India trade negotiations weigh in on the domestic currency, intensifying foreign outflows. By 9.22 am, the local unit had depreciated to 90.5550 against the greenback, surpassing its previous all-time low of Rs 90.55 on Friday.

Analysts noted that the rupee has been on a continuous slide since the first Trump tariff announcement in April 2025. The drop has continued in the December quarter despite support from the RBI, likely due to further widening of the current account deficit.

"We think the rupee is suffering on two fronts. First, exports have weakened in Q4CY25 due to front-ending earlier in the year before tariffs kicked in. On the other hand, consumption recovery in the festival season would have pushed up import demand and put further stress on the external account. Elevated gold imports are accentuating the problem," Emkay Global said in a strategy note.

Ashika Stock Broking in its weekly note said delays in the US–India trade talks, higher US tariffs and subdued foreign investment have further strained the currency, while the RBI’s rate cuts and measured interventions have offered only limited relief. 

Analysts noted that the rupee-dollar pair has convincingly broken above the long-defended 90 psychological barrier, re-establishing its long-term ascending channel with a consistent pattern of higher highs and higher lows through 2025. 

"Resistance is seen at 90.80–91.00; a sustained breakout could extend the move toward 91.50–92.00 in the coming weeks. Even if the pair retraces, buyer demand is expected near 89.50–89.00, keeping the medium-term trend firmly intact in favour of the US dollar," said Ponmudi R, CEO at Enrich Money, in a weekly noye.

The weakness in rupee has intensified foreign outflows, with December equity selling near Rs 18,000 crore so far. On Monday, the BSE Sensex fell about 400 points while Nifty was testing 25,900 level. 

A major drag on the market continues to be the elusive US-India trade deal which is impacting India’s exports to the US, widening of trade deficit and continuous depreciation in the rupee, said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited​.   

"India’s macros are in fine shape and policy support has been strong. The fiscal and monetary stimuli imparted to trigger consumption and investment has started yielding results. If the momentum sustains it can give the much needed boost to corporate earnings in FY27," he said.