BIZ DESK
The Indian rupee closed at a record low of 90.4825 per US dollar on Thursday, pressured by delays in finalising a tariff deal between India and the United States as well as strong importer demand for dollars. The currency weakened by 52 paise from Wednesday’s close of 89.9650, breaking last week’s low of 90.43. Thursday’s closing level also marked the intraday low, while the rupee briefly touched an intraday high of 89.96.
According to Vikram Kasat, Head of Advisory at PL Capital, the rupee’s decline reflects a strong US dollar, continued foreign portfolio outflows, and the absence of strong domestic triggers. With the US Federal Reserve’s rate cut already priced in, Kasat noted that near-term direction will depend largely on global risk sentiment, currency trends, and institutional flows.
A report by Emkay Global Financial Services warned that currency-related stress may continue to weigh on India’s macroeconomic stability, keeping vulnerabilities high through the first quarter of calendar year 2026. A timely trade agreement with the US could help ease pressure on the rupee, it added.
Impact on Corporate India
Fitch Ratings said most Indian corporates it rates benefit from natural hedges or have substantial hedging strategies to manage foreign-exchange exposure. However, sectors such as renewables, power utilities, and toll roads, which earn revenue primarily in rupees, remain more vulnerable to currency depreciation.
Fitch noted that some companies have fully hedged their foreign-currency debt obligations or limited foreign-currency borrowing to below 20% of consolidated debt, making a ratings impact unlikely even with further rupee weakness. For partially hedged issuers, the agency does not expect significant rating pressure unless depreciation exceeds its assumptions. Fitch currently forecasts the rupee at ₹87 per USD by end-2026, compared with around ₹90 on December 9, 2025.
The agency said structural protections—such as parent guarantees, intra-group loans, earmarked FX liquidity, and cash-trap mechanisms—should cushion most rated companies against currency volatility.