Rupee Breaches 90/USD Intraday: What’s Driving the Slide? | Code B Blog
The Indian rupee witnessed intense pressure on Tuesday, briefly touching the psychologically crucial 90-per‑dollar level before settling at a record low of 89.96 against the US dollar. The decline—43 paise in a single session—reflects a mix of domestic vulnerabilities and global macro headwinds that continue to weigh on currency sentiment.
Why the Rupee Is Falling
1. Speculator Short‑Covering
Persistent short-covering in the USD/INR derivatives market triggered intraday volatility. Traders anticipating further rupee weakness rushed to unwind positions, accelerating the downside move.
2. Sustained Importer Demand
Importers, especially from energy and commodity-intensive sectors, continued aggressive dollar buying—putting additional pressure on the rupee.
3. FII Outflows
Foreign investors have been net sellers in Indian equities over recent weeks. Capital moving out of India naturally increases demand for the dollar, weakening the rupee.
4. Uncertainty Over the Indo‑US Trade Deal
Lingering uncertainty around the ongoing India–US trade negotiations has added a sentiment overhang.
Forex traders highlighted that market confidence remains fragile until a clearer geopolitical and trade-policy narrative emerges.
Market Commentary
Kotak Securities View
“The 90 zone is a psychological barrier, with a cluster of buy-stop orders above it. Sustained trading above 90 could trigger a sharp move to 91 or higher. RBI must stay active around this level to avoid a one-way trend.”
Banerjee added that an unchecked breakout can create excessive volatility in USD-INR—something the RBI typically works to contain.
Mirae Asset ShareKhan View
“The rupee’s fresh all-time low reflects persistent FII outflows and a widening trade deficit.”
Global Cues
The US Dollar Index was marginally higher at 99.41.
Global risk sentiment remains cautious due to US monetary policy signals and geopolitical uncertainty.
Despite India’s strong macro data, the currency continues to react more to external pressures than domestic fundamentals.
What to Expect Ahead
Analysts are closely watching:
RBI’s intervention strategy near the 90-level
Outcome of Indo-US trade negotiations
FII equity and debt flows
Global oil prices, a major driver of India’s import bill
US policy stance and Federal Reserve guidance
While the structural trend for India remains strong, short-term volatility in USD-INR is likely to persist until clarity emerges on foreign flows and trade dynamics. Explore More Insights
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