Why Rupee Fell To Lifetime Low After India Recorded 8.2% Q2 GDP?

The rupee fell past the 90 mark against USD, hitting a record low on Wednesday, December 3, raising concerns over higher foreign equity outflow before entering 2026.

The rupee effect was also felt in stock exchanges Nifty and Sensex that turned stressed after posting fresh highs. Surprisingly, this comes after Nomura gave a big vote of confidence to Nifty, projecting 29,300 level by 2026, which indicates a positive outlook in the upcoming period for India. 

On the other hand, the foreign portfolio investor (FPI) outflows  in CY 2025 now stands at Rs 1,48,010 crore. Meanwhile, the foreign outflow recorded upto December 2 stood at Rs 4,335 crore as against Rs 3,765 crore, which tallies upto the net November outflows, as per NSDL data.

Also Read:  Rupee Weakens Past 90/$ On Persistent Outflows, Absence Of Trade Deal

What Are The Key Factors Behind Rupee's All-Time Low? 

The rupee has been falling as a result of several factors from concerns cropping up in the US-India trade pact delay to lack of RBI's intervention to buoy the rupee.

The muted RBI intervention has been a critical factor behind the continued depreciation of Rupee. However, with the RBI policy outcome scheduled on Friday, December 5, markets will expect clarity on whether the central bank will step in to stabilise the currency.

YES Securities said the rupee volatility remains elevated due to tariff uncertainty, but downside risk seems to be contained. It also believes rupee is undervalued on a REER basis.

"The weak macro picture in India makes weak currency performance inevitable, there has been a slide in so many data points recently – rising trade deficits, weakening nominal GDP growth, weak FDI and foreigner selling down domestic equities, etc," said Sat Duhra, portfolio manager at Janus Henderson Investors in Singapore, citing a Reuters report. 

The belief on D-street is that RBI will continue to ensure favourable money market conditions and sees MPC maintaining its neutral stance, signalling a likely end to the current easing cycle.

Is There A Positive Side To Rupee's Record Low? 

A weaker rupee makes the country' exports more affordable globally The higher growth in orders would requires more factory shifts, and jobs, translating into cash. inflows into India, according to a market expert. Meanwhile, economist Rajiv Kumar said, there is "nothing to worry about Rupee depreciating against major world currencies."

He reiterated that it is "good for the economy as it encourages labour intensive exports from India, increases foreign exchange earnings and generates more jobs."

"High time that a so called ‘strong Rupee’ is seen as the symbol of economic strength at this stage of the economy. The Macho Rupee syndrome should be discarded immediately. Let’s try and change this public narrative which is detrimental to the country," he said.