Rupee Plunges to Record Low Near 90 Central Bank Steps In Amid Feeble Foreign Flows

e Indian rupee fell to an all-time record low on December 2, 2025, breaching previous floors and moving precariously close to the psychologically significant 90 per US dollar level. This severe depreciation was triggered by a confluence of persistent external pressures. Key among these factors were sustained feeble foreign portfolio flows, with overseas investors pulling large sums out of domestic equities, and a widening trade deficit that had hit record highs in the preceding months. Compounding the bearish sentiment was the protracted delay in finalizing a crucial US-India trade deal, which had dampened market expectations for improved bilateral trade and essential capital inflows, leaving the currency vulnerable to global dollar strength.
In response to the sharp decline, the Reserve Bank of India (RBI) actively intervened in the foreign exchange market, selling dollars to contain volatility and prevent a decisive breach of the 90 mark. The pressure on the currency was amplified by hedging activity, as importers rushed to front-load dollar purchases in anticipation of further rupee weakness. This slump occurred despite robust domestic economic fundamentals, including strong GDP growth reported for the previous quarter. However, this domestic resilience was overshadowed by the adverse flow dynamics and the structural strain from external trade issues, forcing the central bank to defend the key threshold against sustained selling pressure.