The Indian rupee plunged to a new all-time low of around ₹90.46 per US dollar on Thursday, continuing its sharp slide amid global economic pressures and persistent currency market volatility
What’s Driving the Rupee’s Weakness
- 🔹 Trade deal uncertainty: Ongoing delays in concluding a US–India trade agreement have weighed heavily on investor sentiment, reducing confidence in the rupee.
- 🔹 Demand for dollars: Strong corporate dollar demand — particularly for import payments and foreign obligations — has increased pressure on the rupee.
- 🔹 Foreign capital outflows: Continued foreign investment withdrawals from Indian equities and markets have further weakened the rupee.
- 🔹 Global dollar strength: A resilient US dollar on the back of global economic trends and monetary policy expectations added to the downward pressure.
Central Bank Response
The Reserve Bank of India (RBI) is believed to have intervened in the foreign exchange market to moderate the currency’s fall, though reports suggest the action was mild and aimed at slowing the slide rather than defending a specific exchange rate level.
Market and Economic Implications
- 📉 Record depreciation: The rupee’s fall past ₹90 marks a significant milestone, making it one of the weakest performances among Asian currencies in 2025.
- 📊 Balance of payments concerns: Analysts warn that widening trade deficits — driven by expensive imports like crude oil — and weak capital inflows could worsen the current account balance if trends persist.
- 💹 Imported inflation risk: A weaker rupee typically makes imported goods and commodities costlier for Indian businesses and consumers, potentially adding inflationary pressure.
Outlook and Expert Views
- 📈 Potential turnaround: Some market strategists suggest the rupee could be nearing a turning point if external conditions improve and trade uncertainties are resolved.
- 📉 Medium-term outlook: Forecasting agencies like Fitch indicate that the rupee may continue trading near current weaker levels into next year, reflecting ongoing currency and trade pressures. The Economic Times
Key Takeaway: The Indian rupee’s historic low of ₹90.46 against the US dollar underscores deepening currency market stress driven by trade uncertainty, strong dollar demand, and capital outflows — with ongoing RBI support and policy developments set to influence its near-term trajectory.
