Indian Rupee Crashes Past 90/USD For the First Time Ever; Market Falls as Currency Hits New Record Low

Rupee breached the psychologically crucial 90 per US dollar mark for the first time ever on Wednesday morning, continuing its decline further as concerns over weak trade flows, persistent foreign portfolio outflows, and uncertainty around the potential India-US trade deal is currently weighing heavily on market sentiment.

The rupee slipped to an intraday low of 90.13 per USD, surpassing Tuesday's previous record low of 89.9475. At the time of writing, the currency was trading 0.3% lower and has now become one of the rupee's toughest phases in recent years.

"The Indian rupee has been in a weakening mode, with the GOI/RBI wanting to help exporters and may have kept the dollar well bid in the past few days. Nationalised banks were buying dollars at the higher levels consistently yesterday, which indicated the intentions. There was a deal at 90.0050 after the close of market hours on the trading platform. The stalled India-US trade talks and heavy FPI outflows are causing this fall in rupee despite the dollar index weakening, unable to sustain the levels above 100. If the RBI support eases at 90, then we could see 91 also in this cycle." as per the Finrex report.

Stock Markets Also Feel the Pain

The sharp fall in the rupee spilt over into the equity market as well. Benchmark indices turned negative as currency pressure triggered caution across sectors. At the opening bell today, Nifty 50 slipped below the 26,000 level, and Sensex fell nearly 200 points intraday.

At the time of writing, Sensex was trending at 84,901.29 after falling by 236.98 pts, or 0.28%, while Nifty was hovering near 25,935.40, down by 96.80 pts, or 0.37%.

A Critical Moment Before the RBI MPC Meeting

The rupee's record fall comes just days before the RBI Monetary Policy Committee (MPC) announces its December 5 policy decision.

"The MPC meeting starts today with the interest rate decision to be declared on 5th December, ahead of the FED interest rate decision on 10th. A cut by RBI could invite further selling of the rupee, but with a weakened INR, a cut looks like a difficult talk to be achieved this Friday. Exporters keep converting the dollar on a spot basis with minimum hedges at the moment, while importers buying the dips can be the only strategy for the present," the Finrex report further mentioned.