The rupee marks a quiet end to the historic week, lagging regional peers after a rate cut by the RBI

The rupee closed little changed on Friday after the Reserve Bank of India cut its policy rate, sending the currency below 90 per dollar for the first time in almost a week, on concerns over declining dollar inflows into the economy.The rupee closed at 89.98 against the US dollar, little changed from the previous session’s close. During the week the currency depreciated by almost 0.6%.

A widening trade gap and bloodless investment flows, along with concerns over stalled trade talks with the US, have undermined dollar inflows into the world’s fifth-largest economy and made the rupee Asia’s worst-performing currency.Analysts believe a turnaround is likely if New Delhi reaches a trade deal with Washington.

Meanwhile, the RBI cut rates by 25 basis points on Friday, leaving room for further easing, helping the rupee bounce back from its intraday peak of 88.69 and making it a laggard on an otherwise good day for Asian currencies.

“The RBI’s policy announcement is likely to have only a temporary impact on the rupee in our view, and the trade deal announcement and capital flows are likely to remain the dominant driver for the currency,” said Sakshi Gupta, chief economist at HDFC Bank.

The bank believes the rupee could fall to 92 per dollar if a trade deal is not reached soon. The RBI is expected to tolerate a weaker currency and intervene only to curb speculative activity, Reuters reported on Thursday. “We are not targeting any price level or range. We believe that the markets are very efficient in the long run,” RBI Governor Sanjay Malhotra said at a press conference after the monetary policy.

Meanwhile, India’s stock indexes, the BSE Sensex and Nifty 50, rose about 0.5% each, while the yield on the country’s 10-year government bonds fell to a low of 6.46% before rallying, buoyed by the RBI’s interest rate cuts and liquidity measures.

Attention now turns to the US Federal Reserve’s policy decision, due on December 10. Money markets generally expect the Fed to cut rates by 25 basis points.