The depreciation also comes amid ongoing bilateral talks between New Delhi and Washington to resolve tariff tensions. India’s Chief Economic Advisor V Anantha Nageswaran told Bloomberg TV that most issues in the trade deal have been resolved, and said he would be “surprised” if a deal is not finalised by March.

However, analysts warn that continued delays could push the rupee towards the 92-level against the dollar.

Adding to external pressure, Mexico has imposed import duties of up to 50% on more than 1,400 products from Asian countries without a trade deal. The Mexican Senate approved the tariff bill this week, with duties ranging between 5% and 50%, according to a Bloomberg report.

Markets had expected the rupee to recover towards the 88–89 levels after the Fed rate cut. However, despite a weaker dollar index, the domestic currency slipped to another low, highlighting the dominance of local factors and dollar demand.