Rupee Hits Record Low: Why India's Currency Crisis Hinges on US Trade Deal

At the time of filing this report, the rupee was trading at an all-time low of 89.713 per US dollar.

The Indian currency has weakened by about 4 per cent this year so far.

According to experts, the strength in the US dollar and the delay in the India-US BTA first tranche are also weighing on the rupee.

Rupee depreciated by 0.8 per cent in November alone, according to a Bank of Baroda report, penned by economist Aditi Gupta.

"The depreciation in INR was more pronounced if we consider the fact that the dollar weakened in the same period. Strong demand from importers, low foreign inflows, uncertainty over US trade deal and an elevated trade deficit, weighed on the domestic currency," Economist Aditi Gupta noted in the report released on Monday.

According to Aditi, a surprisingly good GDP print also did not "quite help lift sentiments", with the currency currently trading at a new low.

The Bank of Baroda economist expects the currency to trade with a depreciating bias in the near term, with news on the US-India trade deal a major catalyst for any sharp movement in either direction.

"We expect USS/INR to trade in the range of 89-90/USD this month," the report read.

In November, the Indian rupee showed two distinct phases, according to the Bank of Baroda economist. In the first phase, lasting from November 1-20, the currency largely held steady, trading in a narrow range of 88.57-88.78 per USD. Thereafter, the Rupee slipped sharply by 0.8 per cent in a single day to decline to a record low of 89.41.

This was significant as the 89 mark was deemed to be a crucial point in the defence of the rupee, Aditi Gupta said. Against that backdrop, she said markets are looking for cues on the progress in US-India trade deal.

"Some impact of the higher tariffs is visible in the trade numbers for Oct'25, and a continued impasse can have a negative impact on both the external position as well as investor sentiments," she concluded, making an outlook remark.

Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, recently said, "With no clear progress on the India-US trade deal and uncertainty still dominating sentiment, rupee weakness may continue toward the 90.00 mark. Immediate resistance for the rupee now stands at 89.20, while the bias remains firmly on the downside."

On the flip side, the rupee, which has been under pressure for a host of reasons, is unlikely to depreciate further in the near term, Union Bank of India had asserted in a recent report, providing a rationale that the rupee has already weakened by roughly 4 per cent this year.

"Given that the rupee has already weakened by roughly 4 per cent this year, we do not expect significant further depreciation in the near term," their report read.

- ANI