The Indian rupee has recently experienced a significant and concerning breach of the $90-to-a-dollar psychological mark, ultimately settling at a fresh all-time low of 90.15 against the US dollar. The alarming depreciation marks a crucial point in the country's economic narrative, sparking immediate analysis from financial experts and policymakers alike. The currency's latest decline, dropping 19 paise from its previous closing value on Wednesday on December 03, 2025, is primarily attributed to sustained foreign fund outflows and persistently high crude oil prices, which continue to put pressure on the domestic economy.
The day's trading saw the rupee open sharply lower at 89.96 against the US dollar. It subsequently fell further in the session, touching a new low of 90.30 before finally closing at 90.15. This substantial drop of 19 paise followed an earlier decline on Tuesday when the rupee had already depreciated 43 paise to close at a then-lifetime low of 89.96 against the US dollar. That earlier slump was largely due to short-covering by speculators and sustained demand for the dollar.
Foreign exchange analysts have pointed to the intense selling of Indian stocks by foreign investors as a major driving force behind the rupee's current fall. This capital flight has reduced the supply of foreign currency in the Indian market, thus weakening the rupee's value. Compounding this issue is the prevailing uncertainty over the India-US trade deal. Although a robust trade deal would typically bolster the rupee, its absence continues to weigh on the currency's prospects. Despite these headwinds, one perspective offered is that a weak US dollar index has prevented a steeper fall in the rupee's value.
Speaking at an economic event, V Anantha Nageswaran, the government's chief economic adviser, offered a measured view. He stated that the government is not overly concerned about the sliding rupee. Nageswaran expressed the belief that the falling rupee is neither detrimental to inflation nor to exports, suggesting that the situation is manageable and will improve in the coming year.
However, the Reserve Bank of India (RBI) is certainly under pressure to act. Foreign exchange traders noted that the RBI's apparent initial hesitation to intervene forcefully to halt the decline has given speculators further room to operate, intensifying the pressure on the currency. The persistent efforts to stop the slide, which were previously perceived as inadequate, only served to embolden the market.
Further policy responses are anticipated. The RBI's Monetary Policy Committee (MPC) is scheduled to meet soon to deliberate on the policy rate. Experts suggest that any rate action taken at this juncture would likely be seen as a knee-jerk reaction aimed at protecting the rupee, which could be detrimental to the central bank's efforts to foster a resilient economic recovery. Maintaining its current course of action would underscore the RBI's commitment to riding out the current period of uncertainty.
In summary, the rupee's cross of the $90 mark is a significant event. While some policymakers maintain an optimistic outlook for a recovery next year, the immediate challenges posed by foreign fund outflows, high crude oil prices, and the lack of a stabilizing US trade deal are undeniable. The RBI faces the delicate task of defending the currency without undermining its broader economic policy objectives. The coming weeks, especially following the MPC meeting, will be critical in determining the rupee's trajectory.
