Rupee breaks previous record, slips to 89.76 against Dollar as foreign outflows deepen

The Indian rupee slipped to a new lifetime low on 1 December, weakening to 89.76 against the US dollar despite the economy posting an impressive 8.2 per cent year-on-year expansion in the July–September quarter. The currency breached its previous record of 89.49 touched a fortnight ago and has now fallen by nearly one rupee since 3 November.

The rupee has been among the world’s weakest performers in 2025, faring better only than the Turkish lira and the Argentine peso.

The strong GDP reading helped propel domestic equities to fresh highs and pushed the 10-year government bond yield to around 6.553 per cent on Monday, near a one-week peak.

However, the buoyant macro data offered little support to the currency, which continues to contend with persistent foreign outflows and external headwinds.

Overseas investors sold about USD 400 million worth of Indian shares on Friday, taking net equity outflows for the year beyond USD 16 billion, according to Reuters. Traders also pointed to the expiry of sizeable positions in the non-deliverable forwards market as a factor adding pressure on the rupee.

Recent data showed the Reserve Bank of India’s forward book widening to more than USD 63 billion in October, indicating continued intervention to smooth volatility. Meanwhile, optimism generated last month by remarks from Indian and US officials about the potential easing of steep 50 per cent tariffs on Indian exports has faded in the absence of a firm agreement, adding to the currency’s vulnerability.

The tariffs have dampened trade flows and curbed portfolio investments, leaving the rupee heavily dependent on central bank support. India’s merchandise trade deficit also climbed to a record high in October, compounding the pressures on the external sector.

With agency inputs