During the day, the rupee witnessed a huge move of 107 paise with the high/low being 88.60/89.67.
The Indian currency (INR) was under pressure due to a worsening trade deficit, lack of visibility on the progress of talks on high US tariffs on Indian goods, aggressive short-covering triggered after the INR breached the 88.80 level, and the dollar gaining strength on expectations that the US Fed may not cut rates at its December meeting.
The Indian currency closed at a record low of 89.49 per US dollar (USD), down 79 paise from the previous close of 88.70.
During the day, the Rupee witnessed a huge move of 107 paise with the high/low being 88.60/89.67.
India’s trade deficit (imports exceed exports) widened from $32.15 billion in September to $41.68 billion in October. This puts pressure on the rupee.
Dipti Chitale, CEO of Mecklai Financial Services, said: “The rupee hit a new all-time low today, making an exceptionally sharp decline less than an hour before the close of the interbank market.
“This decline coincidentally aligns with comments yesterday by RBI Governor Sanjay Malhotra, who indicated that there is no specific target level for the currency and that the recent depreciation is largely a function of demand for the dollar and broader geopolitical tensions.”
She noted that the rupee’s fall could be attributed to multiple factors, including lack of intervention from the RBI following the withdrawal of selling support in the USD, stop-loss triggers around the 88.90-89.00 level and the uncertainty surrounding the India-US trade talks, with possible further delays.
Abhishek Goenka, founder of IFA Global, noted that the 88.80 per USD level had become a line in the sand and most market participants would have had that in mind as a stop loss.
“While the outbreak has been attributed to a lack of developments on the trade deal front or the fact that an Indian company is on the list of sanctioned companies for purchasing Iranian crude oil, the real reason appears to be more technical in nature.
Rate reduction
“Expectations of a Fed rate cut in December have been tempered due to the lack of data availability due to disruptions from the US government shutdown. Most Fed members who have spoken recently have been aggressive. The dollar has strengthened overall as a result. This could have led to the RBI abandoning its defense of 88.80,” he said.
Goenka underlined that the RBI has already deployed significant reserves to defend the 88.80 level.
“The short position in forwards including NDF (non-deliverable forward) is probably over $70 billion. RBI would have wanted to keep some ammunition dry to intervene at higher levels instead of going all in at 88.80,” he said.
Going forward, Goenka expects the rupee to settle in a new range of 88.80-90.00, with the move likely to be deliberate in a gradual, stair-like manner.
Anindya Banerjee, head of research – currency, commodity and interest rate derivatives at Kotak Securities, noted that the USD/INR pair broke decisively above 89, a level that many importers and dealers thought the RBI would defend.
“Once this perception failed, aggressive short covering emerged in the onshore and offshore markets, leading to stops and amplifying the upside,” he said.
In the near term, Banerjee expects a combination of risk flows, a firmer US Dollar Index and uncertainty over trade deals to keep the bias upward, with the pair potentially testing the 90 mark. For now, traders are looking at a wide spot range of 88.70–90.30.
Published on November 21, 2025
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