Last Updated:
The Indian rupee has reached a historic low, due to which there has been increased concern in the market. Despite the weak dollar, selling by foreign investors and uncertainty about trade deals have created pressure. Now everyone’s eyes are on India-US trade agreement, which can provide relief to the rupee.
New Delhi. The Indian Rupee has currently reached its weakest level till date. On Friday, the rupee slipped to 90.56 against the dollar intraday, while it stood at 90.49 at market closing. Surprisingly, this decline has come at a time when the global dollar index is at a two-month low. Experts believe that the reason for the weakness of the rupee is not due to global but domestic reasons, of which the continuous selling by foreign investors and uncertainty regarding the India-US trade deal are the biggest.
Selling by foreign investors increased pressure
So far in the month of December, Foreign Portfolio Investors (FPIs) have withdrawn about Rs 17,955 crore from the Indian market. If we talk about the whole year, this figure has reached more than Rs 1.61 lakh crore. Continuous withdrawal of money from the stock market is having a direct impact on the rupee. Experts say that until the confidence of foreign investors returns, the rupee may remain under pressure, even if the dollar weakens globally.
Hope raised by India-America trade deal
Recently, trade talks took place between India and America for two days. There was also a discussion over phone between Prime Minister Narendra Modi and US President Donald Trump on taking forward economic partnership. The market is hopeful that if there is a concrete agreement between the two countries on tariffs, market access and supply chain, then investors’ confidence may return. Experts believe that the trade deal will reduce uncertainty and the rupee may also benefit from it.
What will be the movement of rupee in future?
According to analysts, if there are positive signals regarding the trade deal and global risk sentiment improves, the rupee may strengthen to the level of 89.80–89.60. But if the agreement remains weak or gets postponed, then the rupee may go from 90.80 to 91.50 to 92.00. Some global brokerages believe that the weakness of the dollar next year may support the rupee and by the end of 2026 it may reach around 86 per dollar. At present, the market’s eyes are fixed on the India-US trade deal, which will play an important role in deciding the direction of the rupee.
