Rupee falls to record low of 90.42 against dollar after US Fed rate cut
INR vs USD: The currency was trading around ₹90.42 per dollar at 1.45 pm, according to news agency Reuters.
The rupee slid to a fresh record low on Thursday, weakening past ₹90.42 per US dollar, as persistent dollar demand from corporates and lenders overshadowed the brief optimism triggered by the US Federal Reserve’s rate cut.
The currency was trading around ₹90.42 per dollar at 1.45 pm, according to news agency Reuters.
Dollar demand overrides Fed boost
While the US Fed on Wednesday delivered a widely expected rate cut - amid a sharply divided vote - and signalled a prolonged pause ahead, its less-hawkish outlook initially pressured the dollar. Asian currencies traded mixed, and the dollar index recovered slightly from a near two-month low.
But the weakness in the greenback offered little relief to the rupee.
Traders pointed to heavy dollar buying by foreign and local private banks, largely linked to merchant and corporate payments, as the dominant force driving the rupee’s slide.
“There is consistent dollar outflow pressure which is outweighing the supportive global cues,” a banker told Reuters.
Worst annual performance since 2022
The rupee is now on course for its steepest annual decline since 2022, dragged by a series of external pressures - from uneven foreign portfolio flows to the recent escalation in US trade tariffs targeting Indian exports.
Analysts warn that failure to secure a trade accommodation with Washington could expose the rupee to deeper losses in the coming months.
RBI swap to add liquidity
Market attention is now shifting to the Reserve Bank of India’s upcoming $5 billion dollar-rupee buy/sell swap, scheduled next week.
The operation is aimed at injecting liquidity into the banking system, which has seen an imbalance due to earlier RBI interventions and heavy IPO-related inflows.
Bankers expect strong participation, noting that the swap could help absorb the excess dollar liquidity and stabilise short-term volatility.
Sitharaman: ‘Rupee Will Find Its Own Level’
Finance minister Nirmala Sitharaman, speaking at the Hindustan Times Leadership Summit 2025, urged caution around politicising the rupee’s weakening.
“The rupee will find its own level,” she said, adding that currency movements must be viewed in the broader context of India’s economic fundamentals. She noted that during earlier periods, when her party was in Opposition, high inflation and a fragile economy had made currency depreciation far more concerning.
“Currency exchange rates are extremely sensitive… this debate must be circumscribed by the realities of where the economy stands today,” she said.
