The Rupee on Tuesday breached the psychologically crucial 91 to the US Dollar mark to close at an all time low, weighed down by factors such as continuous selling by FPIs in the equity and debt markets, dollars getting sucked out due to the $5 billion USD/INR Buy/Sell swap, a strong greenback and India’s tariff negotiations with the US getting prolonged.
The Indian currency weakened about 30 paise to close at 91.0275 per USD against previous close of 90.73. Intraday, it tested a high/low of 90.7625/ 91.08.
The Rupee has depreciated 100 paise from 90 to 91/USD in just nine trading sessions. Market experts say the RBI is intervening sparingly as a depreciating Rupee could deter foreign investors from repatriating their profit from sale in the Indian capital markets.
The three-year USD/INR Buy/Sell swap auction, which the RBI conducted on Tuesday, for $5 billion received a robust response, with market participants offering to park $10.35 billion. The central bank accepted 118 bids out of 222 at a weighted average premium of 777.57 paise.
While the aforementioned swap has sucked out Dollar liquidity worth $5 billion, experts say this will bolster RBI’s power to intervene in the forex market to smoothen volatility in the Rupee’s movement against the Dollar.
Abhishek Goenka, Founder and CEO, IFA Global, said that the pressure on the Rupee seems to be emanating from the NDF (non-deliverable forward) market. The 1-month (m) NDF is about 4-5 paise (p) higher than onshore.
“It seems RBI is not rolling over its offshore short forward positions, and that pressure is getting transmitted onshore. 1m offshore is at 36 p while 1m onshore is at 31p,” he said.
V Rama Chandra Reddy, Head-Treasury, Karur Vysya Bank, noted that in FY26 so far, Dollar outflows due to FPI selling in the capital markets, mostly in the equity side, crossed $17 billion. However, over the last 6-7 trading session, there is selling pressure on the debt side also.
He observed that in the first six months of current fiscal year, incremental inflows into FCNR (B) deposits have come down 87 per cent, resulting in pressure on the Rupee. Moreover, offer-for-sale of equity by foreign companies such as LG and Hyundai too has had a depreciating effect on the Indian currency.
Reddy opined that the Indian unit can pull-back if there is a positive outcome from India’s tariff talks with the US.
Dipti Chitale, CEO, Mecklai Financial Services, observed that the rupee breached the 91 mark amid delays and hurdles in the India–US trade negotiations, particularly around India’s red lines on agriculture and dairy products.
“This weighed on market sentiment. Further, the RBI’s $5 billion buy–sell swap added to near-term pressure on the rupee.
“Liquidity conditions are being eased aggressively, with the second tranche of the RBI’s OMO (open market operation of Government Securities) scheduled for 18 December, together resulting in a substantial injection of rupee liquidity. This, combined with FII outflows seen today, has added to depreciation pressure,” she said.
Chitale emphasised that the RBI has clearly indicated that it is not defending any specific level and will allow the Rupee to move in line with demand–supply dynamics, though some intervention was observed around the 91.08 level.
Published on December 16, 2025
