The Indian rupee hit a record low of 89.48 against the US dollar on Friday, surpassing its previous all-time low of 88.80. The decline was driven by a shrinking risk appetite among investors amid fading expectations of a Federal Reserve interest rate cut and uncertainty surrounding a US-India trade deal.
The currency weakened 0.8% on the day. Pressure on the rupee has continued since steep US tariffs on Indian exports were implemented in late August. Foreign investors have withdrawn $16.5 billion from Indian equities so far.
The Reserve Bank of India, which had actively defended the 88.80 level, appeared to have scaled back its intervention, stepping in near 89.50. Market experts note that the rupee’s movement depends heavily on the outcome of the trade negotiations, which could significantly affect the USD/INR rate.
Indian Rupee Hit Record-Low
The rupee’s slide is set against a backdrop of broader global economic uncertainty, including speculation about US monetary policy and trade tensions. The US Federal Reserve’s shift away from expected rate cuts has dampened investor confidence, affecting emerging market currencies like the rupee.
US tariffs on Indian exports have further constrained economic prospects, reducing export-led inflows and contributing to volatility. The rupee is now among the weakest Asian currencies this year, highlighting challenges facing India’s external sector and financial markets.
Official Statements and Market Sentiments
Traders observed that the Reserve Bank of India’s stance has evolved recently, allowing the currency to breach earlier support levels in line with persistent market short positions. RBI’s calibrated interventions aim to manage volatility without distorting market dynamics, while maintaining focus on macroeconomic stability.
Sector experts caution that while the rupee’s depreciation increases import costs and inflationary pressure, India’s robust foreign exchange reserves and prudent policy frameworks provide some cushion.
How a Record-Low Rupee Affects Common Indians
This is how it affects you and me:
1. Daily Essentials Become Costlier
A weaker rupee makes all imports expensive, petrol, electronics, appliances, and medical equipment, pushing up household expenses even if you don’t directly buy imported goods.
2. Fuel Price Rise Triggers Overall Inflation
Costlier crude oil increases transport and manufacturing costs, raising prices of vegetables, grains, packaged food, delivery services, and travel, leading to broad cost-push inflation.
3. Foreign Education, Travel & Remittances Get Heavier
Tuition fees, living expenses abroad, international travel, and money sent to children overseas all become more expensive due to higher dollar conversion rates.
4. Loan EMIs May Rise Indirectly
Rising inflation pressures the RBI to avoid rate cuts, or even tighten rates, making home, car, and personal loans more expensive over time.
5. Export Sectors Gain Slightly, But With Limits
IT, pharma, textiles, and jewellery may benefit as Indian goods become cheaper globally, but gains depend on strong global demand and domestic inflation staying under control.
The Logical Indian’s Perspective
The rupee’s fall reminds us of the interconnectedness of global trade, monetary policy, and domestic economic health. The Logical Indian calls for balanced, transparent policies prioritising economic resilience, equitable growth, and protection for vulnerable communities from inflation impacts.
Dialogue among policymakers, businesses, and citizens is vital to navigating uncertainties with shared commitment.
