India’s rupee smashed through the once-unthinkable 90-to-the-dollar mark for the first time on Wednesday, hitting an all-time low and analysts warned of further weakness.
The breach of this key psychological level hits households and corporate balance sheets alike, making imports costlier, and cements the currency’s ranking as Asia’s worst performer this year.
The fall to a record low of Rs 90.2950 per dollar comes after months of stalled US trade negotiations. Punishing US tariffs of 50 per cent have slammed India’s exporters, widened the trade deficit, and soured global appetite for Indian assets.
So far in 2025, the rupee has slid 5.3 per cent against the dollar. The latest drop came despite official data on Friday showing that India’s economy accelerated by a far better-than-expected 8.2 per cent in the last quarter.
“A real concern now is the continued depreciation in the rupee and fears of further weakness since the Reserve Bank of India is not intervening to support the currency,” said Geogit Investments chief investment strategist V.K. Vijayakumar.
Foreign portfolio investors have already pulled more than $17 billion out of Indian equities this year, and foreign direct investment has been negative for two straight months, as foreign investors have taken more money out than they have put in. Merchandise exports sank 12 per cent year-on-year in October, while the trade deficit widened to a record Rs 41.7 billion, according to the latest official figures.
“The weak macro picture in India makes weak currency performance inevitable,” Sat Duhra, a portfolio manager at Janus Henderson Investors, told Reuters.
Importers, worried the rupee could fall even more, are rushing to buy dollars. Each time the rupee slips past an important level, demand for dollars surges. Exporters, meanwhile, are holding on to their dollars, hoping the rupee will drop further so they earn more in rupees.
The central bank has been smoothing the currency’s fall by selling dollars and buying rupees but has refrained from aggressively defending any particular level. Analysts say the central bank has changed its approach: instead of trying to hold the rupee at a fixed level, it is now letting it weaken gradually to reflect India’s worsening trade and financial situation.
Past plunges were sparked by global crises, from the 1991 balance-of-payments collapse to the Asian financial crisis in 1998, the global financial meltdown in 2008, the taper tantrum in 2013, and the commodity shock of 2022. This time, however, the dollar itself is not especially strong. The rupee’s slide is being driven by domestic factors: stinging US tariffs, capital outflows, a record trade gap, and companies scrambling to protect themselves.
For Indian households, the fallout is immediate. India imports 90 per cent of its crude oil and much of its electronics, fertilisers, and edible oils, meaning everything from petrol and LPG to cooking oil, packaged foods, and appliances becomes costlier. Imported fridges, mobiles, laptops, and smartphones will rise in price. Foreign holidays are more expensive, and students abroad face higher tuition bills in rupee terms.
Record-high prices for metals and gold have swollen the import bill, while US tariffs have eroded export competitiveness. Import-dependent firms are being squeezed as raw materials get pricier and machinery purchases abroad become more expensive. IT and business-service giants, which are excluded from the tariffs, will see higher rupee gains on their dollar revenues, and families receiving money from abroad will also benefit.
Goods exporters, in theory, should benefit from a weaker rupee, but the US tariff wall wipes out much of those gains. Economists say that with the rupee sinking, there is virtually no chance the central bank will cut interest rates at its monetary policy meeting on Thursday, even though inflation is at a record low. “Any hint of a rate cut could put fresh pressure on the rupee,” says CR Forex Advisors.
Currency traders say 90 is no longer a red line, with expectations building that the rupee could slip to 91 in the coming days. Analysts warn firms to prepare for the currency to trade in the Rs 93-to-95 range in 2026. Ninety is “the new normal level,” said one analyst.
The rupee has traced a slow but steady slide against the dollar. From a post-independence value of Rs 3.30, it held below Rs 5 until 1966, when a major devaluation pushed it to Rs 7.50. By 1983, it had slipped to Rs 10, only to tumble past Rs 20 during the 1991 balance-of-payments crisis. The Asian financial crisis and domestic shocks took it to Rs 40 by 1998, and the global financial crisis drove it past Rs 50 in 2008. Further strains saw it weaken to Rs 60 in 2013, the year before Modi took office. It slipped to Rs 70 in 2018 and Rs 80 in 2022.
Even if US-India trade talks break through, economists caution there is no guarantee of a snap-back in the rupee, though a deal could slow the slide. A prolonged stalemate, however, would only heighten pressure. “The longer it takes for a trade deal to come, the longer the pressure on the rupee is likely to persist," said Sakshi Gupta, principal economist at HDFC Bank, who forecasts the rupee weakening into the Rs 92-to-93 range in the next few months.
Chief Economic Adviser V. Anantha Nageswaran, meanwhile, told reporters, “I am not losing sleep” over the rupee’s value. “Right now it is not impacting inflation or exports,” he said, forecasting the currency would strengthen next year.