The rupee hits a record low of 91.08 against the USD, undermined by hedging demand and outflows

The Indian rupee fell to a lifetime low on Tuesday as weak risk appetite compounded ongoing pressure from hedging demand and portfolio outflows amid continued uncertainty over a US trade deal.The rupee fell to 91.0750 per dollar before ending 0.3% lower at 91.0275. The currency has fallen more than 6% against the dollar this year and will be among the worst performing emerging market currencies in 2025.

The South Asian unit hit all-time lows for the fourth straight session, with traders anticipating that the central bank could intervene more aggressively to prevent a speculative build-up against the currency.

A recovery of the rupee is considered unlikely without a breakthrough in US-India trade talks.

Indian exports rose in November despite high US tariffs, providing new leverage in ongoing trade negotiations with Washington and easing pressure on New Delhi to reach a quick deal.

“Looking ahead, the base case is a ‘mild, not wild’ depreciation of the INR against the USD. The INR is projected at 90/USD by June 2026 and 92/USD by June 2027, with the pace of depreciation dependent on the evolution of capital flows and global risk appetite,” Axis Bank said in a note on Tuesday.

Foreign investors have sold a net worth of more than $18 billion in local stocks so far in 2025. The risky mood in global markets also hit Indian stocks on Tuesday, dragging the benchmark Nifty 50 down 0.6%. Investors are slightly anticipating a set of US data later in the day that will help gauge the US interest rate path next year.

MSCI’s index of Asian shares outside Japan fell more than 1%, while regional currencies were mixed and the dollar steady against a basket of major peers.