FX.co ★ Indian Rupee Threatens Key 90 Level

The Indian rupee has declined to approximately 89.9 per USD, marking another unprecedented low and indicating a possible breach of the significant psychological threshold of 90. This downturn is attributed to the ongoing absence of a trade agreement between the United States and India, coupled with elevated tariffs that continue to dampen market sentiment. India is among the few significant economies without a formal trade agreement with Washington, contributing to lingering uncertainty regarding tariff reductions and exacerbating the current account deficit. With a 4.8% depreciation this year, the rupee stands as Asia's poorest performer. Despite efforts by the Reserve Bank of India to mitigate volatility, its capacity for further intervention is limited. This situation leaves the rupee exposed to potential risks if a trade deal is not reached, increasing the likelihood of a sustained break beyond the 90 mark. Additionally, a strong GDP performance in the third quarter did little to bolster the currency, which remains hindered by trade imbalances, foreign capital withdrawal, and ongoing demand for the US dollar. In terms of policy, the majority of economists predict the RBI will reduce rates on December 5 and maintain this through 2026; however, robust GDP growth may lead some to advocate for rate stability.