The Indian rupee plunged to a fresh all-time low of 89.95 against the US dollar on Tuesday, December 2, breaching the previous day's record low of 89.78. The currency has depreciated by over a rupee since November 3, despite India reporting robust GDP growth of 8.2% for the September quarter.

Analysts See Further Downside

Ashish Vaidya of DBS Bank India told CNBC-TV18 that in the absence of near-term positive triggers, he would not be surprised to see the rupee touch 90 or even 92, assigning a 60–70% probability to this scenario.

Key Drivers of the Decline

Analysts cited several factors for the rupee's weakness:

• Persistent FPI Selling: Daily selling by foreign portfolio investors without significant intervention from the Reserve Bank of India (RBI).
• NDF Expiry Impact: Anindya Banerjee of Kotak Securities pointed to large Non-Deliverable Forward (NDF) expiries over recent days that needed to be rolled over or covered.
• Technical Factors: Banerjee warned that if the rupee breaches 90, stop-losses could trigger a swift move toward 91.

RBI's Stance and Policy Expectations

Jayesh Mehta of DSP Finance suggested the RBI should cut interest rates on Friday and announce Open Market Operations (OMOs) worth ₹2 lakh crore through March 2026 to support liquidity. Reuters reported that the RBI likely sold dollars to prevent the rupee from breaching 90 immediately.

Sakshi Gupta of HDFC Bank noted that while there is a case for a rate cut, the rupee is unlikely to be the dominant driver of the RBI's decision, with domestic growth taking precedence.

The rupee pared some losses later in the day, trading at 89.93 against the dollar.