Rupee Hits New Record Low, Weakens Below 90.50 Against US Dollar — Market Expert Explains Why

The Indian rupee hit fresh record low on Friday against the US dollar, as the depreciation trend continues.

The downward pressure in rupee comes against the backdrop of Commerce Minister Piyush Goyal confirming that trade negotiations with the United States are going well.

Goyal added that India should not negotiate with deadlines or hard stops, though he did confirm the recent US trade team was not a part of the negotiation round.

The rupee depreciation also comes on the back of US Federal Reserve cutting rates by a quarter percentage point, which has acted as a trigger for gold and silver prices in recent days.

Harshal Dasani, Business Head, INVAsset PMS, believes the rupee depreciation is not directly linked to how dollar is faring and can largely be attributed to the lack of a constructive development surrounding the India-US trade talks.

"The dollar index has eased from its recent highs after the Fed’s rate cut and softer US macro prints, indicating that global dollar momentum is actually weakening. Yet USDINR continues to stay elevated, and the key reason is the delay in the India–US trade deal," he said.

"Markets had priced in progress on tariff rationalisation and greater market access, but the lack of a clear announcement has created a temporary overhang on sentiment," he added.

However, Dasani admitted that the rupee weakness is more sentimental and structural. He remains constructive on India's fundmentals.

"Domestically, India’s fundamentals remain strong with solid growth, moderating inflation and comfortable FX reserves, which is why this move looks more sentiment-driven than structural," he said.

Dasani added that the rupee could start to appreciate once US and India reach a breakthrough in trade talks.