Indian Rupee Crashes to Historic Low, Breaches 90 per Dollar for First Time

New Delhi, December 3, 2025 — #IndianRupee hit an unprecedented milestone on Wednesday, slipping past the ₹90-per-dollar mark for the first time in history. The sharp depreciation marks one of the most volatile phases for the currency in recent years and reflects a combination of persistent foreign fund outflows, a widening trade deficit, and uncertainty surrounding the long-negotiated India–US trade agreement.

A New Record Low

The rupee closed at ₹90.14 per dollar, after touching an intraday low of ₹90.22, triggering concerns across markets. The psychological barrier of 90 has long been viewed as a red line for policymakers and traders, symbolizing deeper structural pressures within the economy.

Currency dealers described the trading session as “one-way selling,” with minimal signs of intervention from the Reserve Bank of India (RBI) beyond routine liquidity adjustments.

Foreign Fund Outflows Add Pressure

A major driver of the rupee’s fall has been the continued withdrawal of foreign portfolio investors (FPIs) from Indian equities and debt. Over the past few weeks:

• Global funds have pulled out billions from Indian markets
• Concerns over stretched equity valuations led to profit-taking
• A stronger U.S. dollar and rising U.S. Treasury yields diverted investment away from emerging markets

Analysts note that the shift is not India-specific but part of a broader emerging-market selloff. However, India’s large fiscal and trade imbalances have made the impact more pronounced.

Trade Deficit Widens Sharply

India’s trade gap has ballooned in recent months due to:

• Elevated crude oil prices
• High import demand for electronics and capital goods
• Sluggish global demand for Indian exports such as textiles, chemicals, and engineering products

The widening deficit has accelerated dollar demand among importers, putting further downward pressure on the rupee.

Uncertainty Over India–US Trade Deal

Negotiations on the India–US trade deal — once touted as a near-finalized agreement — have hit a phase of ambiguity. Reports of disagreements over tariffs, digital trade rules, and agricultural access have unsettled markets.

Investors fear that prolonged uncertainty could impact export competitiveness, delay investments, and weigh on long-term diplomatic and economic cooperation between the two countries.

RBI Stays Cautious

While the RBI has intervened at intervals to prevent disorderly market movements, it has avoided aggressive action. Officials maintain that India’s foreign exchange reserves remain “comfortable,” though they have declined in recent months due to defensive interventions.

Economists say the RBI is balancing exchange-rate stability with the need to preserve reserves amid a volatile global environment.

Impact on Consumers and Businesses

A weaker rupee typically increases the cost of imported goods and fuels inflationary pressures. Sectors expected to feel immediate impact include:

• Fuel and energy: Higher oil import bills could raise transportation and electricity costs
• Electronics & smartphones: Most components are imported
• Education abroad: Tuition and living expenses for Indian students will rise
• Aviation: Higher jet fuel and leasing costs

Exporters — especially in IT, pharmaceuticals, and textiles — may benefit from higher dollar revenues, but the advantage could be offset by rising input costs.

What Lies Ahead

Economists are divided on whether the rupee’s fall marks the start of a deeper slide or a temporary overshoot triggered by global risk aversion. Much will depend on:

• The trajectory of U.S. interest rates
• Progress on the India–US trade deal
• Global commodity prices
• RBI’s willingness to intervene more actively

For now, the breach of ₹90 per dollar stands as a symbolic moment — highlighting the vulnerabilities of an economy navigating global uncertainty, domestic imbalances, and shifting geopolitical equations.