Rupee Slips Past 90 Against U.S. Dollar for the First Time as FPI Outflows Intensify

The Indian rupee breached the 90-per-dollar mark for the first time on Wednesday, December 3, 2025, sliding to fresh lifetime lows amid persistent foreign investor outflows and sustained dollar buying by domestic banks. The milestone underscores mounting pressure on emerging market currencies ahead of crucial central bank decisions in India and the United States.

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A Historic Weakening Despite Global Dollar Softness

The rupee opened at 89.96 at the interbank foreign exchange market and quickly fell to an intra-day low of 90.15, before stabilising slightly to 90.02, a decline of six paise from the previous close.

The movement comes a day after the currency logged its weakest-ever closing of 89.96, driven by aggressive short-covering and higher demand for dollars from importers.

Forex dealers noted that the slide occurred even as the U.S. dollar index softened — trading 0.13% lower at 99.22 — and global crude prices eased, which typically support the rupee. Brent crude futures were marginally down at $62.43 per barrel.

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What’s Driving the Rupee’s Fall?

1. Heavy FPI Outflows

Foreign Institutional Investors sold ₹3,642.30 crore worth of equities on Tuesday, adding to a multi-week trend of exits from emerging markets. Traders say global risk sentiment remains fragile ahead of the U.S. Federal Reserve’s December 10 interest rate announcement.

2. Persistent Dollar Buying by Banks

Treasury desks report that several large nationalised banks continued purchasing dollars at elevated levels, potentially to support exporters or hedge positions.

3. India–U.S. Trade Talks at a Standstill

Uncertainty around stalled bilateral trade negotiations is adding another layer of pressure on the currency, according to market analysts.

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Expert View: Rupee Could Slide Further

Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said the rupee’s weaker trajectory reflects a combination of policy positioning and market flows.

He explained that the government and RBI “may be comfortable with a softer rupee to support export competitiveness,” adding that state-run banks’ consistent dollar purchases were visible in Tuesday’s after-hours trades, including a deal executed at ₹90.0050.

Bhansali warned that the rupee could “touch 91 per dollar in this cycle if the RBI allows market forces more room at the 90 level.”

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Policy Decisions Loom Large

The rupee’s record lows come as the RBI’s Monetary Policy Committee (MPC) begins its three-day meeting on Wednesday. The interest rate decision — scheduled for December 5 — will be closely watched for signs of dovishness.

According to Bhansali, any rate cut could accelerate outflows and trigger further depreciation, particularly with the U.S. Federal Reserve set to announce its next move on December 10.

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Market Reaction

Indian equity markets opened in the red amid global caution.

• Sensex slipped 165.35 points to 84,972.92

• Nifty 50 fell 77.85 points to 25,954.35

A weaker rupee tends to weigh on investor sentiment as it raises import costs, pressures corporate earnings in certain sectors, and signals macroeconomic uncertainty.