In the calendar year to date, the rupee has depreciated about 5 percent (or about 425 paise) against the US dollar
The Indian currency (INR) has been battered by FPI selling in the stock market, demand from importers, short covering by speculators, delays in finalizing the tariff deal with the US, possibility of repo rate cut and reduced RBI intervention, among others.
In the calendar year to date, the rupee has depreciated about 5 percent (or about 425 paise) against the US dollar (USD).
Soft RBI defense
The Indian unit closed down around 32 paise on Tuesday against the previous close of 89.5475 per dollar. Amit Pabar, MD, CR Forex Advisors, noted that with the RBI not actively defending the levels, every round of dollar demand pushes the rupee lower.
“The RBI had protected the 88.80 level for many days but allowed it to break on November 21. Since then, the central bank has only intervened briefly to control sharp moves, and today it has allowed another decline of 15-20 paise. This shows that the RBI is allowing a slow and gradual depreciation while preventing excessive volatility. Since 90 is an important psychological and technical level, the focus now shifts to how firmly the RBI manages this zone,” he said.
Pabari noted that the coming sessions will show whether the trend of slow depreciation continues, or whether a more active defense emerges around 90.
Focus on 90 level
Anindya Banerjee, Head of Commodity and Currency at Kotak Securities, said the USD-INR has extended its rise towards 90, driven by continued short-covering by speculators and continued demand from importers.
He opined that the 90 level is a major psychological barrier – and that above that level is likely to be a cluster of buy stop orders. “This is precisely why the RBI needs to remain active below 90; if the pair continues to hold above this zone, the market could soon shift to a higher trend phase towards 91.00 or even higher. At this stage, it is essential for the central bank to avoid speculators from getting too comfortable with a one-way trend as that could cause an unnecessary spike in USD-INR volatility,” Banerjee said.
According to Pabari’s assessment, “the market now appears to be settling into a broader range of 88.90-90.20. Historically, the rupee has tended to stabilize in a new range when it breaks a key level. Earlier shifts from 81-83 to 83-85 and later 86-88 followed the same pattern.”
The break above 89 is likely to have pushed the USD-INR into a new consolidation zone between 88.90 and 90.20, he added.
Published on December 2, 2025
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