Indian rupee dragged by weak equities, hovers near record-low levels against yuan

MUMBAI: The Indian rupee slipped against the dollar on Monday, dragged by weak equities, and was stuck near record lows against its Chinese counterpart, a divergence analysts say is likely to persist as the year unfolds.

The rupee was at 90.20 per dollar as of 11:00 a.m. IST, down modestly from its close of 90.1625 in the previous session.

Against the offshore Chinese yuan , the currency lumbered near an all-time low of 12.95.

India’s benchmark equity indexes, the BSE Sensex and Nifty 50 were each down 0.5% on day, lagging behind most regional peers.

Uncertainties over the U.S.-India trade relationship have been a persistent drag, with foreign portfolio outflows and negatively skewed hedging behaviour compounding the hurt, while the yuan drifted to a near 3-year high against the dollar.

Investors’ long bets on the yuan have risen to their highest in 15 years while sentiment on the rupee continues to be bearish, the latest Reuters poll showed last week.

The difference in outlook for the currencies also echo the divergence in the fortunes of local stock markets.

India’s Nifty 50 rose 10% in 2025, about half the return delivered by China’s blue-chip CSI300 index.

Analysts at MUFG reckon that the divergent fortunes of the currencies of Asia’s two giants is likely to persist. USD/CNY is expected to grind lower towards the 6.80-6.90 handle over time while USD/INR is expected to rise to 92.00 by the third-quarter of 2026, the analysts said in a note.

“We have pushed out our assumptions for a trade deal between India and the U.S. to 2H2026 from our previous expectations of early 2026,” the note said, referring to one of the factors weighing down the rupee.

Meanwhile in global markets, the dollar index was down modestly at 99 while U.S. equity futures fell after Federal Reserve Chair Jerome Powell said the Trump administration threatened him with a criminal indictment, stoking investor worries about the central bank’s independence.