The Indian rupee tumbled to a new record low against the US dollar on Friday, marking a steep setback in a week dominated by global uncertainty and fading hopes of near-term US rate cuts. The currency plunged to 89.48 to the dollar, slipping past its previous record of 88.80 reached in late September and earlier this month. By afternoon trade, it was down 0.8% for the day.
The sharp slide came on the back of renewed caution in global markets, triggered by overnight selling in cryptocurrencies and AI-related technology stocks. Traders also grappled with uncertainty surrounding the long-anticipated India–US trade deal, a development many had hoped would provide clarity on bilateral economic ties.
Global Sell-Off Adds to Rupee Pain
“Global risk-off sentiment has spilled into currency markets after a sharp overnight sell-off in cryptocurrencies and AI-linked technology stocks,” said Anindya Banerjee, Head of Research – Currency, Commodity and Interest Rate Derivatives at Kotak Securities. “The sudden unwinding of risk trades is weighing on emerging-market currencies, including the Indian rupee.”
Banerjee added that doubts over the timing and outcome of the proposed trade agreement with Washington have further soured the mood. “With no firm timelines emerging, sentiment remains fragile,” he noted.
The latest drop follows Reserve Bank of India (RBI) Governor Sanjay Malhotra’s comments a day earlier, suggesting that pressure on the rupee would ease once New Delhi clinches a “good” trade pact with the United States.
Market watchers said the rupee’s fall intensified once the dollar-rupee pair surged beyond 89.00, a level traders widely believed the central bank would defend. “Once this perception failed, aggressive short-covering kicked in across onshore and offshore markets, triggering stops and amplifying the upside move,” Banerjee said.
Dhiraj Nim, currency strategist at Australia and New Zealand Bank, told Bloomberg that the RBI appeared to be stepping away from direct intervention. “There is uncertainty over when the trade deal will arrive and as such the RBI may not want to keep defending a level and using reserves,” he explained.
Foreign portfolio investors have sold off Indian equities worth ₹143,698 crore so far this year, adding fresh pressure to the domestic currency. As a result, the rupee has now weakened more than 5% against the US dollar in 2024, ranking among the worst-performing currencies in Asia.
