Rupee goes for a free fall, slips beyond 89 amid trade uncertainties

The Indian Rupee (INR) on Friday depreciated to it’s lifetime low of 89.6650 against the U.S. Dollar as compared with it’s previous close of 88.6850, down 98 paise due to negative cues from global and domestic equity markets owing to trade-related concerns, forex analysts said. This is single day biggest fall of the INR in over 3 months, they said. 

Anindya Banerjee, Head of Research – Currency, Commodity and Interest Rate Derivatives said, “Global risk-off sentiment has spilled into currency markets after a sharp overnight sell-off in cryptocurrencies and AI-linked technology stocks. The sudden unwinding of risk trades is weighing on emerging-market currencies, including the Indian Rupee.”

“Adding to the pressure is the lingering uncertainty around the proposed India–US trade deal, which markets had hoped would offer clarity on the bilateral economic outlook. With no firm timelines emerging, sentiment remains fragile,” he said. 

“USD/INR broke decisively above 89.00, a level many importers and dealers believed the RBI would defend. Once this perception failed, aggressive short-covering kicked in across onshore and offshore markets, triggering stops and amplifying the upside move,” he added. 

In the near term, a combination of risk-off flows, a firmer U.S. Dollar Index, and trade-deal uncertainty keeps the bias upward, with the pair potentially testing the 90.00 mark, Mr Banerjee said. 

Dilip Parmar, Research Analyst, HDFC Securities said today’s was the biggest single day percentage fall after May 8, 2025.

The Rupee has become the worst performer among Asian peers, he said adding “The sudden surge in the USDINR pair was largely attributed to short covering, delay in U.S. India trade deal and the apparent absence of intervention from the central bank.”

Yes Bank in a note said “ once the RBI allowed the USD/INR to trade beyond the 88.80 levels, markets started covering short positions and this led to the currency to depreciate beyond 89.00 levels.”

“RBI also continues to hold significant short positions, and INR can depreciate if the RBI were to decide to not roll these over.

Guessing the end-March levels would be difficult as INR has now moved into the uncharted territory, but we think that it may be capped at 90.00,” it said