Rupee Plunges to Record Low Amid Trade Uncertainty
The Indian rupee breached the ₹91-mark against the US dollar for the first time in intra-day trade on Tuesday, slipping 36 paise amid foreign fund outflows and persistent uncertainty surrounding the India–US trade deal.
According to market data, the rupee opened at 90.87 per dollar — nine paise lower than Monday’s close — after losing 25 paise in the previous session. The domestic currency has now weakened by nearly 6% since January 2025, when it traded near ₹85.72 per dollar.
Imports, Travel, and Overseas Education to Cost More
A weak rupee directly impacts the cost of imports and foreign expenses. With the rupee breaching 91-mark, essential imports such as crude oil, gold, and electronic goods are set to become costlier.
For Indian students and travellers abroad, the fall means higher expenses. When the rupee was at ₹50 per dollar, students in the US needed ₹50 to buy $1; now, at ₹91, the same dollar costs almost double. This sharp depreciation is expected to raise tuition and living costs for students and increase travel budgets for families.
Why the Rupee Is Falling
Economists say multiple global and domestic factors are behind the rupee’s sharp slide:
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US trade tariffs: The Trump administration’s 50% tariff on Indian imports could lower India’s GDP growth by up to 80 basis points and widen the fiscal deficit.
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Heavy FII selling: Since July 2025, Foreign Institutional Investors (FIIs) have withdrawn more than ₹1.55 lakh crore from Indian assets, diverting funds to safer US markets.
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Rising demand for dollars: Import-heavy businesses are buying dollars to hedge against volatility, adding pressure on the rupee.
Expert Views: RBI’s Role Under Watch
Market analysts believe the Reserve Bank of India (RBI) may step in soon to stabilize the currency.
Jatin Trivedi, VP – Research at LKP Securities, noted that "the rupee’s sharp fall past 90 is largely due to delays in the India–US trade deal and high US tariffs affecting export competitiveness." He added that RBI intervention has been limited so far, allowing market-driven depreciation to continue.
The upcoming RBI policy meeting on Friday is expected to bring crucial announcements addressing the rupee’s decline. Economists suggest RBI may use measures such as open market operations or currency swaps to manage liquidity and support the rupee.
What Determines a Currency’s Value?
A country’s foreign exchange reserves and global capital flows significantly influence its currency strength. When dollar reserves drop, the rupee weakens; when inflows rise, it stabilizes.
Currency depreciation, like the one India is witnessing now, makes exports more competitive but raises import costs — creating a delicate balance for policymakers.
Economic Outlook
With trade tensions still unresolved and global commodity prices on the rise, analysts expect the rupee to remain under pressure in the short term. Any breakthrough on the India–US trade front or a strong RBI move could offer near-term relief.
For now, the rupee breaching 91-mark signals rising economic headwinds — highlighting the need for swift policy action to restore confidence in the currency and protect India’s growth momentum.
