Sliding rupee not a sign of weakness: SBI Research

The rupee may have slipped past the psychological 90-per-dollar mark, but this decline is not an indication of weakness in the Indian economy, according to a new SBI Research report released on Thursday.

The Indian currency, which hit a fresh record low earlier in the day, recovered slightly by the end, rising 0.22 paise from its intraday low to trade at 89.98 against the US dollar.

Rupee hits record low

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Earlier on Thursday, the rupee touched 90.42 per dollar—a historic low. It is now down 5.5 per cent year-on-year, making it Asia’s worst-performing currency. This comes even as India’s GDP grew 8.2 per cent in the July–September quarter of FY26, underlining a sharp disconnect between robust domestic growth and weak external demand. The SBI Research analysis attributes the rupee’s slide to global factors rather than any erosion in India’s economic fundamentals. The report noted that the recent depreciation is driven largely by global uncertainty, delays in the US-India trade deal, and foreign portfolio outflows—"rather than any deterioration in India's economic fundamentals."

According to the report, three major triggers have contributed to the rupee’s fall: uncertainty surrounding the India-US trade deal, foreign portfolio outflows after two strong years of equity inflows, and the Reserve Bank of India’s stance of avoiding aggressive intervention in the currency market.

Simultaneously, the offshore non-deliverable forward (NDF) market has turned more active, while the US dollar index shows renewed strengthening.

Also Read: USD vs INR: Why is Rupee falling constantly? Anil Singhvi decodes

Concerns over trade deficit ‘oversold’

SBI Research also highlighted that fears over a widening trade deficit dragging down the rupee are overstated. Between April and October, India’s goods and services deficit stood at USD 78 billion — only marginally higher than USD 70 billion in the same period last year.

Also Read: Rupee hits record low against US dollar, crosses 90 mark — who gains, who loses?

US tariffs deepening impact

The report shows that since April 2, when the US announced steep tariff hikes on multiple countries, the rupee has depreciated around 5.5 per cent more than most major global currencies.

The US has imposed a 50 per cent tariff on Indian goods significantly higher than the tariff levels slapped on China, Vietnam, Indonesia, or Japan. This, the report said, is one of the biggest reasons behind the rupee’s current strain, even as India continues efforts to diversify exports and negotiate new free-trade agreements. Nearly USD 45 billion worth of Indian exports, largely labour-intensive sectors, are likely to be directly hit by the US tariffs, the report warns.