Rupee Breaches 90 Level: Uday Kotak Weighs In On Foreign Selling

Billionaire Banker Uday Kotak weighed in on the currency breaching Rs 90 to the dollar, pointing to foreign selling as the immediate trigger. He said the proximate reason for the move was foreign selling of Indian stocks both FPI & PE under FDI, even as Indian investors continued buying.

“Time will tell who is smarter. For now foreigners seem smarter,” he wrote in a post on social media platform X. Kotak noted that the one-year Nifty dollar return is 0, underscoring why global investors may be pulling back. Still, he framed the moment as part of a much longer cycle. “This is a long game,” he said, adding that it was “time for Indian business to shake out of comfort zone.”

Understanding the Rupee’s Decline

Traders say the rupee’s decline has been driven by a mix of policy intent and market forces. According to market participants, the government and the RBI appear inclined to support exporters, keeping the dollar well bid in recent days. State-owned banks were seen consistently buying dollars at higher levels on Tuesday, signalling that intent.

A deal was even executed at 90.0050 after market hours on the trading platform. Stalled India–US trade talks and heavy FPI outflows are adding further pressure, even as the dollar index struggles to hold above 100. If RBI support eases around the 90 level, analysts warn the pair could test 91 in the current cycle.

Expert Insights

Amit Pabari of CR Forex Advisors had earlier noted that the RBI’s shift has been visible. After weeks of defending the 88.80 level, the central bank quietly stepped back on 21 November, allowing the market to break through. “Once 88.80 was allowed to break, it became clear the RBI is no longer blocking every move — instead guiding the rupee through a controlled, gradual depreciation and stepping in only to prevent sharp swings,” he said.

This nuanced approach by the RBI highlights the delicate balance between supporting the economy through a stable currency and allowing market forces to dictate the value of the rupee. As the rupee continues to navigate these challenges, Indian investors and businesses must adapt to the changing landscape.

Implications for Indian Investors

The rupee’s breach of the 90 level against the dollar has significant implications for Indian investors. A weaker rupee can make imports more expensive, potentially affecting businesses that rely heavily on imported goods. On the other hand, a weaker rupee can also make Indian exports more competitive in the global market, which could be a boon for export-oriented industries.

For investors, it’s crucial to understand these dynamics and how they might impact their investment portfolios. Investing in the Indian stock market requires a deep understanding of both local and global economic factors. As Uday Kotak mentioned, this is a long game, and investors must be prepared to ride out the fluctuations in the currency and stock markets.

Conclusion

The rupee’s breach of the 90 level against the dollar is a significant event with far-reaching implications for the Indian economy and investors. As Uday Kotak pointed out, foreign selling has been a key factor in this move, but Indian investors continue to show faith in the market. Whether foreigners or Indian investors will be proven smarter in the long run remains to be seen, but one thing is certain – the Indian stock market and the rupee will continue to be influenced by a complex interplay of local and global factors.