Rupee hits new lifetime low, but top economist says ‘don’t panic’

The domestic currency opened at 91.08 per dollar, compared to its previous close of 91.032. However, the rupee recovered marginally in the second half of the opening hour.

“Uncertainty around trade negotiations and persistent foreign investor selling continue to dominate sentiment, keeping pressure firmly on the currency,” Amit Pabari, managing director at CR Forex Advisors, told Moneycontrol.

Analysts trace the rupee’s decline to April 2025, when US President Donald Trump announced tariffs on Indian goods, triggering concerns over exports and the trade balance. The pressure has intensified in December amid a widening current account deficit.

Market participants also cite uncertainty over India–US trade talks, rising corporate demand for dollars and a growing trade deficit as key factors accelerating the currency’s fall.

Despite intermittent intervention by the Reserve Bank of India (RBI), analysts say the rupee remains under sustained pressure.

Even as the currency continues to hit new lows, Axis Bank chief economist Neelkanth Mishra on Tuesday said there was no reason for panic. Speaking to NDTV Profit, Mishra said a weaker rupee should not be viewed as a sign of economic weakness.

“We have to let go of the bravado that a strong currency means a strong economy. The currency is just a balancing factor,” he said.

Mishra added that a sharp rise in foreign direct investment repatriation has added to pressure on the currency. “We used to see $20–25 billion of FDI repatriation about four to five years ago. That number is now $45 billion, implying an additional $20–25 billion in outflows,” he said.