Currency nears psychological 92 level following fresh US trade tariffs

The Indian currency faced a challenging session on Thursday as the Indian Rupee record low hit a new bottom of 91.9850 against the US Dollar. This slump surpassed the previous low of 91.9650 recorded just last week, bringing the currency dangerously close to the psychological barrier of 92. Despite India maintaining its status as a fast-growing economy, external pressures are weighing heavily on the local unit.

Market experts point to a combination of factors for this decline. Since the United States imposed steep tariffs on Indian merchandise, the rupee has depreciated by nearly 5%. Overall, the currency has lost 2% of its value since the start of 2026. This downward trend persists even though domestic data shows a robust 8.2% GDP growth for the September quarter.

The Reserve Bank of India (RBI) reportedly stepped into the market early Thursday to stabilize the situation. Traders noted that the central bank’s goal was likely to manage extreme volatility rather than defend a specific price point. However, the speed of the decline—moving from 91 to nearly 92 in just six sessions—has caused ripples across the financial sector.

Several global and domestic hurdles are driving this trend:

• US Trade Policies: Heavy tariffs have hurt India's export balance.
• Capital Flight: Foreign investors are pulling money out of local portfolios.
• Corporate Hedging: Importers are rushing to buy dollars to protect themselves from further losses, while exporters are holding onto their foreign currency.

While India recently secured a free trade agreement with the European Union, the rupee remains weak against other major currencies, falling 7.5% against both the Euro and the Chinese Yuan. Analysts at Goldman Sachs suggest the pressure may continue, predicting the rupee could potentially touch 94 per dollar over the next year. For now, the RBI remains vigilant, focusing on smoothing out sharp market fluctuations.