Rupee watch: Currency nears 90 amid RBI caution; data-heavy week to test stability

The Indian rupee could come under further strain this week, with traders watching whether the currency edges closer to 90 per US dollar amid limited signs of strong central bank intervention. The rupee touched a record low of 89.49 on the previous Friday and slid 0.8 per cent over the week, driven by portfolio outflows, doubts over a potential US–India trade deal, and a perceived retreat by the Reserve Bank of India (RBI) from defending a key support level.A trader at a major private bank quoted by news agency Reuters said that the unexpected decline “caught the market on the wrong side,” and the pressure is likely to persist. The rupee has weakened 4.5 per cent in 2025, lagging regional counterparts despite resilient domestic fundamentals and robust equity markets. Analysts cited US tariffs as a major drag on India’s trade and portfolio flows, with hopes that a trade agreement could stem the currency’s slide.Abhishek Goenka of IFA Global was quoted by Reuters as saying that the rupee may now stabilise within an “88.80–90.00 range,” moving in a “gradual, staircase-like manner.” Meanwhile, the dollar index strengthened last week even as markets priced in chances of a US Federal Reserve rate cut following dovish comments by New York Fed President John Williams.Bond markets are expected to track liquidity trends and upcoming growth indicators. According to Reuters, the 10-year benchmark (6.33% 2035) closed at 6.5665 per cent on Friday, with traders expecting a 6.52–6.60 per cent band this week. The RBI recently made consecutive bond purchases — Rs 148.10 billion in the week to November 14 after Rs 124.70 billion a week earlier — its first such buys in nearly six months. The frontloaded nature of these operations has prompted speculation that they were largely for replacement demand rather than signalling a yield stance.Attention is also on the RBI’s December 5 policy decision, with uncertainty around whether the central bank will cut rates. Deutsche Bank’s India economist Kaushik Das said that the bank expects a 25-basis-point reduction, saying a Taylor Rule calculation points to a terminal repo rate of 5.25 per cent, reported Reuters. The bank estimates GDP growth for July–September at 7.7 per cent, compared with 7.8 per cent in the previous quarter.The rupee rebounded on Monday, settling at 89.20 after banks and importers sold dollars and global crude prices dipped. As per PTI, the RBI sold dollars in the offshore NDF market early in the day, helping keep the currency in the 89–89.30 range.The currency had earlier plunged 98 paise to close at 89.66 on Friday — its steepest one-day fall in over three years — amid strong dollar demand and weak equitiesKey data due this week, as listed by Reuters, includes India’s fiscal deficit, industrial output and GDP figures on November 28, alongside several US indicators such as PPI, retail sales, consumer confidence and durable goods orders.