NEW DELHI, Dec 3: The Indian rupee has hit an all-time low, breaching the critical 90 per US dollar mark, as the delay in finalizing a trade deal between India and the US continues to weigh heavily on market sentiment. On Wednesday, the rupee weakened to a low of 90.13 per US dollar, surpassing its previous record low of 89.9475 hit on Tuesday. This decline is attributed to the lack of forceful intervention by the Reserve Bank of India (RBI) and persistent foreign outflows.

Factors Contributing to the Decline:

Several factors have contributed to the rupee's decline:
Delay in India-US Trade Deal: The prolonged delay in finalizing a trade agreement between India and the US has led to uncertainty and pressure on the rupee.
Persistent Foreign Outflows: Foreign investors have pulled out approximately $17 billion from Indian equities this year, contributing to the currency's woes.
Widening Current Account Deficit: India's current account deficit has widened, driven by a surge in gold imports and a decline in exports.
Limited RBI Intervention: The RBI has adopted a soft-touch approach to intervention, which has allowed the rupee to adjust gradually.

Expert Opinions

Analysts expect the rupee to remain under pressure in the near term, with some predicting further depreciation. Sakshi Gupta, Principal Economist at HDFC Bank, expects the rupee to weaken to 91.30 by the end of next year, assuming no significant change in US trade tariffs. Meanwhile, Deutsche Bank's Kaushik Das forecasts a 25-basis-point repo rate cut by the RBI in its December policy meeting ² ³ ?.

Conclusion

The Indian rupee's decline past the 90 per US dollar mark is a reflection of the ongoing uncertainty surrounding the India-US trade deal and persistent foreign outflows. While the RBI's soft-touch approach has allowed the currency to adjust gradually, experts expect further depreciation in the near term.