Indian Rupee Breaks Historical 90 Barrier Against US Dollar: Impact on Markets and Investment Outlook

The Indian rupee plummeted on Wednesday, breaking the critical 90-per-dollar threshold for the first time in history.

The currency reached an unprecedented low of 90.13 against the US dollar, surpassing its previous all-time low of 89.9475 recorded just one day prior.

This significant depreciation occurred amidst poor trade and portfolio performance, coupled with increasing uncertainty surrounding the India-US trade agreement.

These combined factors exerted continuous downward pressure on the rupee throughout the trading session.

The currency's dramatic decline also negatively impacted domestic equity markets, with the Nifty index dropping below 26,000 points—reflecting growing caution among investors.

The Sensex similarly fell by nearly 200 points in early trading as the weakening rupee raised serious concerns about inflation and foreign investment activity.

Market analysts noted that sentiment remained tense as traders closely monitored both the rupee's stability and developments in trade negotiations between India and the United States.

"The rupee depreciation will halt and even reverse when the India-US trade deal materializes, likely this month. However, much depends on the specific tariffs to be imposed on India as part of the agreement," analysts explained.

Meanwhile, the Indian stock market opened quietly on Wednesday, with both benchmark indices showing minimal movement in early trading.

The Sensex increased marginally by just 12 points to 85,151, while the Nifty declined 18 points to 26,014.

At market opening, shares of HUL, Titan, Tata Motors PV, NTPC, BEL, Trent, Bajaj Finserv, Kotak Bank, Ultratech Cement, Maruti Suzuki, L&T, Power Grid, and ITC were among the leading decliners in the morning session.

"A significant concern contributing to the market's gradual decline is the continuing depreciation of the rupee and fears of further devaluation, particularly as the RBI is not intervening to support the currency," market experts stated.

"This concern is compelling Foreign Institutional Investors to sell despite improving fundamentals of rising corporate earnings and strong GDP growth rebound," they further noted.