Rupee falls to new low as strong dollar demand and FPI outflows weigh

The rupee hit a new all-time low of 90.41 against the dollar on Friday, reflecting strong demand for dollars from importers amid rising global precious metals prices. The currency hit an intraday record low of 90.56 against the dollar.The lack of an India-US trade deal and Mexico’s imposition of protectionist tariffs on India and other countries that do not have a free trade agreement with the country weighed on sentiment as foreign investors continued to withdraw money from local markets, forex dealers said. The Mexican tariff of 5-50% will take effect from January 1, 2026.

The local currency opened weaker at 90.43 against the dollar, compared to the previous close of 90.32, losing further ground from intraday lows on steady demand for dollars from importers. The reading reached 90.41 on Friday, marking the third daily decline in a row.

This meant a depreciation of around 1% in December alone, while the currency has weakened almost 6% so far this year, making it the worst performing currency among Asian countries.

Foreign portfolio investors withdrew a net $204.87 million from the stock market on Friday, bringing total net outflows in December so far to $1.996 billion, NSDL data showed.

India’s foreign exchange reserves, meanwhile, rose by $1.033 billion in the week ended December 5 to $687.260 billion, Reserve Bank of India data showed.

This is largely due to a rise in gold reserves, while foreign currency assets fell in sync with dollar outflows. Gold reserves rose by $1.188 billion to $106.984 billion in the reporting week. Foreign currency assets fell by $151 million to $556.880 billion.