Rupee hits fresh low against dollar, nears 90/$-mark amid rising pressures

The Indian Rupee continued its downward trend, depreciating for the fifth straight session to hit a record low against the US Dollar. On Tuesday, December 2, it touched a new record low of 89.97 against the US dollar amid rising global and domestic pressures. The domestic currency surpassed its previous record low of 89.79 against the dollar.

On Tuesday, the rupee opened at 89.70, only to slip further to 89.97, marking a fall of 44 paise from the previous close of 89.53.

Heavy dollar demand from corporates, importers and foreign portfolio investors (FPIs) has amplified pressure on the rupee. The decline also reflects strong dollar momentum, ongoing foreign capital outflows, and volatile crude oil prices, an increasingly challenging setup for Indian markets.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.43 as of 11:30 AM.

Brent crude, the global oil benchmark, was trading higher by 0.05 per cent at $63.20 per barrel in futures trade.

Dilip Parmar, senior research analyst at HDFC Securities, attributed the persistent weakness to a widening trade deficit, delays in the India-US trade agreement, and limited central bank intervention.

On November 28, Commerce Secretary Rajesh Agrawal said India is expecting to reach a framework trade deal with the US this year itself that should address the tariff issue to the benefit of Indian exporters.

The countries have been negotiating for a long time, and the first part of a trade deal was expected by fall 2025, but tariffs on Indian exports from the Trump administration have created hurdles.

"The outlook for the rupee to remain under pressure versus the US dollar for the coming days, as the underlying imbalance between demand and supply for the US Dollar is likely to persist. In the near term, spot USDINR has resistance at 89.95 and support at 89.30," Parmar said.

Sharing similar views, Jateen Trivedi, VP research (Commodity & Currency), LKP Securities, said uncertainty surrounding the India-US trade deal is keeping market sentiment fragile. While officials indicate discussions are moving positively, markets now need a final and concrete agreement for the rupee to find meaningful support.

“Additionally, the lack of notable intervention in November has allowed the rupee to drift weaker without much resistance,” Trivedi added.