The Indian rupee fell to a new all-time low against the US dollar as delayed India–US trade talks, persistent foreign portfolio outflows, and rising safe-haven demand weakened investor sentiment. RBI intervention and a planned dollar–rupee swap offer limited relief.
Rupee Slides to Record Low
TheInterviewTimes.com | December 13, 2025: The Indian rupee plunged to a fresh all-time low against the US dollar on Friday, highlighting mounting pressure from delayed India–US trade negotiations, sustained foreign capital outflows, and a global rush toward safe-haven assets.
During intraday trade, the Indian rupee briefly touched 90.55 per dollar, surpassing its previous record low of around 90.47, set just a day earlier. Although the currency recovered marginally by afternoon, it remained close to historic lows.
So far in 2025, the Indian rupee has weakened by nearly 6 percent, making it one of Asia’s poorest-performing currencies despite India posting strong headline GDP growth.
Traders cited aggressive dollar buying by importers and continued foreign portfolio investment (FPI) outflows as key factors draining demand for the rupee. Market data showed USD/INR hovering near 90.5–90.6, capping a month in which the currency has already lost almost 2 percent.
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Trade Deal Uncertainty Weighs on Sentiment
Investor sentiment has been further hit by the lack of clarity around a long-awaited India–US trade agreement. Markets had expected the deal to ease tariff pressures and revive capital inflows, but repeated delays have turned optimism into caution.
Analysts say the absence of firm political signals from both New Delhi and Washington has become a significant risk for the Indian rupee. Senior bankers warn that without progress, the currency could weaken further.
India’s largest private-sector lender has cautioned that levels near 92 per dollar cannot be ruled out in a prolonged “no-deal” scenario. Economists add that existing high US tariffs on certain Indian exports are dampening trade volumes and portfolio flows, overshadowing India’s recent strong growth data.
Capital Outflows and Safe-Haven Demand Rise
Foreign investors have remained consistent net sellers of Indian equities in 2025, pulling out tens of billions of dollars and placing sustained downward pressure on the Indian rupee.
Currency strategists note that global funds are rotating toward safer assets amid geopolitical uncertainty. Some investors are also trimming exposure to India due to tariff-related risks and stretched equity valuations.
At the same time, domestic dollar demand has risen sharply. Importers, particularly in energy and precious metals, have rushed to hedge exposures amid volatile global prices. Dealers also point to strong demand in the offshore non-deliverable forwards (NDF) market, which has amplified pressure on the spot rupee.
RBI Intervenes, Announces Dollar–Rupee Swap
The Reserve Bank of India (RBI) has been active in the foreign exchange market. Traders report that state-owned banks have intermittently sold dollars to curb sharp moves and prevent disorderly depreciation.
While the RBI does not confirm daily intervention, its presence has been widely felt whenever USD/INR approaches new record highs.
In addition, the central bank has announced a 36-month, $5 billion buy–sell USD/INR swap auction scheduled for December 16. The move is expected to inject around ₹45,000 crore of durable rupee liquidity into the banking system.
The swap, alongside large open-market bond purchases, aims to ease year-end liquidity stress while preserving India’s foreign exchange reserves, which remain close to historic highs.
Fundamentals Strong, But Market Nerves Persist
Many economists argue that the weakness in the Indian rupee is driven more by external flows and market sentiment than by domestic fundamentals.
India’s economic growth remains robust, inflation is relatively contained, and forex reserves are ample. On a trade-weighted, inflation-adjusted basis, several analysts believe the rupee is trading in undervalued territory.
However, markets remain cautious. Without swift progress on the trade front and a reversal in FPI flows, pressure on the Indian rupee could persist into 2026, despite intermittent RBI support.
For now, investors are closely watching signals from India–US trade negotiators and the outcome of the December 16 RBI swap auction as key catalysts that may determine whether the currency stabilizes or slips to new lows.
Key Takeaways
The Indian rupee has fallen to a historic low amid trade deal delays and foreign outflows.
Safe-haven demand and importer hedging are intensifying pressure on the currency.
The RBI has stepped in with interventions and a major dollar–rupee swap.
Despite strong fundamentals, market sentiment remains fragile.
Trade talks and capital flows will be crucial for rupee stability ahead.