The Indian Rupee was trading at Rs 88.78 per US dollar at 10:00 AM today, barely above its all-time low of Rs 88.80 in September 2025.
Traders observed state-run Indian banks selling dollars, which indicates the Reserve Bank of India (RBI) has likely intervened to prevent a further downfall of the Rupee. This strategy works for the short term, but is not an indicator of long term stability.
Why Is The Rupee Depreciating?
To start with, the dollar index was near a three-month high. This automatically means lesser value per unit of Rupee. Adding insult to injury is the flat or even weaker nature of currency. Secondly, the importers have continued hedging, adding pressure on the rupee. This automatically means we need more Dollars to pay the suppliers, which increases the market demand for Dollars
Addressing the elephant in the room is the arm twisting of US tariffs on Indian exports, effective since August 2025. These tariffs have substantially hurt India’s trade balance. A hawkish US Federal Reserve stance is working to strengthening the dollar. This move is attracting the global capital away from emerging markets.
The Rupee to Dollar volatility will remain until the global markets stabilize, and we can see the impact of the new US trade and tariff policies. |
