RBI’s Concern - INR Near 90/USD

[Rakshitha_M]

The rupee opened at a record low on Dec 3, surpassing 90 against the US dollar, amid persistent equity outflows and uncertainty over the India-US trade agreement.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is set to announce its bi-monthly meeting on Dec 3. Currency experts indicated that the significant depreciation of the Indian rupee against the US dollar is expected to be a concern.

Experts are concerned that the central bank might permit the currency to depreciate with minimal intervention.

Abhishek Goenka, founder & CEO of India Forex Asset Management-IFA Global, said that the RBI seems to be taking a more gentle approach to intervention as it is already considerably low on forward short in forward contracts, including NDF (Non-Deliverable Forward). As a result, it may carefully exercise its intervention capabilities.

Additionally, Jateen Trivedi, Vice President of Research Analysis for Commodity and Currency at LKP Securities, noted that the RBI’s limited intervention has contributed to the currency’s rapid decline. With the RBI’s policy announcement scheduled for December 5, the markets are looking for guidance on whether the central bank will intervene to stabilise the currency.

The local currency began trading at a historic low, surpassing the 90-mark against the US dollar amid ongoing equity outflows and uncertainty over the India-US trade agreement.

The Monetary Policy Committee (MPC) will commence its meeting later today, December 3, with the interest rate decision expected on December 5.

INR concern

Analysts indicated that the central bank is likely to incorporate currency depreciation into its monetary policy but might refrain from setting a specific currency level. RBI Governor Sanjay Malhotra has consistently emphasised that the central bank “does not target any particular level” of the rupee and focuses instead on reducing excessive volatility.
Malhotra recently said the rupee’s decline is part of normal market dynamics, adding that a yearly depreciation of about 3–3.5% is consistent with historical patterns. This perspective gives the MPC flexibility to consider a growth-supportive rate cut without feeling compelled to defend a specific exchange-rate level, while still stepping in when needed to stabilise volatility.

Depreciation so far

According to Bloomberg, the Indian rupee depreciated 5.08% between December 31, 2024, and December 3, 2025. It has emerged as the least-performing currency among Asian peers, trailing the Indonesian Rupiah, which declined by 3.17% during the same timeframe. The Philippine Peso dropped by 1.54%, while the Hong Kong Dollar saw a minimal decrease of 0.18%.

In the context of Emerging Markets (EMs), the Indian rupee ranks as the third-worst-performing currency, with Argentina’s Peso and Turkish Lira recording depreciations of 29.18% and 16.69 %, respectively.

With the rupee under pressure and market sentiment cautious, the upcoming policy announcement carries added significance. The RBI’s approach, whether steady, supportive, or more intervention-driven, will determine how the currency behaves in the near Financial year.

Disclaimer: Alice Blue Disclaimer on Financial Services and Trading Risks

[Trader_Since_1999]

If I were to share my honest thoughts like a seasoned trader, I would tell you this in the form of a small story.

I still remember a moment early in my career when a big currency crossed a round number for the first time. Everyone in the office looked tense, screens flashing, people whispering. I asked my mentor, a calm man who had traded for thirty years, whether this meant trouble. He smiled gently and said, “A number alone doesn’t decide anything. What matters is how the people in charge respond.”

That lesson stayed with me.

So when I look at the rupee touching 90 now, I see something similar. It feels big because 90 is a round number, and round numbers always get attention. But when I listen to what the RBI says, they sound steady. They are not rushing or giving signs of panic. They are simply watching the market, stepping in when needed, and letting normal market forces play out. That tells me the situation is not out of control. It is simply part of how currencies behave over time.

Every currency has years when it strengthens and years when it softens. The rupee is having a softer phase this time, and that is normal. Other countries in Asia and emerging markets are going through their own mix of ups and downs too. When I look across the region, nothing about the rupee’s movement feels unusual to me.

If I were the world’s best trader, I would see this moment as one of those times where the market is adjusting, not collapsing. I would watch what the RBI says in the upcoming policy meeting, because that will guide expectations. But based on their calm tone, I would expect them to handle things the way they usually do, with steady hands and clear communication.

So the way I see it, there is no dramatic story here. Just a currency moving through its natural cycle, and a central bank watching it with patience. And sometimes, especially in trading, the quiet stories are the safest ones.