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Rupee Hits Record Low: Why FII Outflows and Global Cues Spell Trouble

The rupee took a hit, dropping to a new record low against the dollar. This was driven by foreign investors pulling money out and uncertainty around trade deals. Interestingly, the stock market didn't follow the currency's lead and actually went up. Experts think the rupee could get stronger over the next couple of years.

Key Points: Rupee Falls to 90.56 vs Dollar on FII Outflows, Trade Worries

  • Rupee opened weak and fell 24 paise to a record 90.56 against the US dollar
  • Pressure came from importers buying dollars amid rising global metal prices
  • Foreign Institutional Investors sold equities worth over Rs 2,000 crore on Thursday
  • Despite rupee weakness, domestic equity markets like Sensex and Nifty traded higher
2 min read

Rupee slides over weak global cues, FII outflows

The rupee slid to a new low of 90.56 against the US dollar amid FII outflows and global trade uncertainty, though equity markets showed resilience.

"We expect the INR to remain below 90 per dollar for the rest of 2025 and gain strength through 2026 to reach around 86 - Forex Experts"

Mumbai, Dec 12

The rupee fell to a new record low in early trade on Friday, slipping 24 paise to 90.56 against the US dollar.

The currency came under pressure as uncertainty around the India-US trade deal and continued foreign fund outflows hurt market sentiment.

According to forex traders, the rupee is weakening mainly because importers are aggressively buying dollars amid rising global prices of precious metals.

The strong demand for the US currency is adding to the pressure on the rupee.

At the interbank foreign exchange market, the rupee opened at 90.43 against the dollar and soon dropped to 90.56.

This marked a 24-paise decline from Thursday’s closing level. A day earlier, the rupee had already tumbled 38 paise to end at a then-record low of 90.32.

However, looking ahead, experts expect that the Indian Rupee likely to strengthen.

“We expect the INR to remain below 90 per dollar for the rest of 2025 and gain strength through 2026 to reach around 86 per dollar by the end of next year,” they added.

While a weaker rupee can support export-oriented sectors such as IT, pharma, textiles among others -- especially at a time when parts of India’s export basket have come under pressure from steep US tariffs -- it simultaneously raises concerns around imported inflation,” experts stated.

Despite this, today’s equity strength indicates that the market is temporarily decoupling from currency pressure and prioritising technical resilience, they added.

Meanwhile, the dollar index, which measures the US dollar’s strength against six major currencies, inched up 0.02 per cent to 98.37.

Brent crude prices were also trading higher at USD 61.69 per barrel, up 0.67 per cent in futures trade.

Despite the weakness in the rupee, domestic equity markets were trading in the green. The Sensex rose 170.40 points to 84,988.53, while the Nifty gained 98.40 points to reach 25,996.95.

Foreign Institutional Investors continued to pull out funds, selling equities worth Rs 2,020.94 crore on Thursday, according to exchange data.

- IANS

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Reader Comments

S
Sarah B
Interesting to see the equity markets rising despite the rupee's fall. Shows some resilience in the domestic economy. The expert forecast for 2026 is reassuring, but the short-term volatility is tough for businesses planning imports.
R
Rohit P
FIIs pulling out over 2000 crore in a day is a big red flag. Where is the confidence? We need stronger policies to make India a more attractive destination for long-term money, not this hot money that flees at the first sign of trouble.
P
Priya S
Every time the rupee falls, my family's plan for my brother's education abroad gets more expensive. It's a real-world stress, not just numbers on a screen. Hoping the predicted strengthening by 2026 holds true.
M
Michael C
The article mentions the silver lining for exporters like IT and pharma. That's crucial. A slightly weaker rupee can boost these sectors and create jobs, which might offset some inflationary pressures. It's a complex balance.
K
Kavya N
With crude prices also up, a double whammy for inflation is coming. RBI will have a tough task managing growth and price stability. Respectfully, I feel the monetary policy could be more proactive in signaling stability to the forex markets.

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