On December 11, 2025, the Indian rupee struck a historic low of 90.47 against the US dollar, depreciating by 0.5% by 1:40 pm amid relentless external pressures. This downturn caps the currency’s steepest annual fall since 2022, fuelled by dwindling foreign portfolio investments, escalating US trade tariffs on Indian exports, and a robust dollar bolstered by US policy shifts.
Policymakers and the Reserve Bank of India (RBI) are vigilantly tracking developments, with exporters bearing higher competitiveness costs and importers facing inflated input prices; traders and economists express alarm over sustained volatility, though no new official statements surfaced today.
Rupee’s Record Plunge Amid Trade Headwinds
The rupee’s sharp decline to 90.47 underscores deepening strains on India’s external economy, where global trade frictions and capital flight have converged to erode currency stability.
Recent market data reveals the USD/INR pair surged past 90 after touching 89.96 the previous day, with intraday trading showing persistent selling pressure from foreign institutional investors withdrawing funds amid geopolitical uncertainties.
A senior economist from a Mumbai-based brokerage highlighted the ripple effects: businesses reliant on dollar-denominated imports, such as oil refiners and pharmaceutical firms, now confront elevated costs that could fuel domestic inflation if unchecked.
Exporters in sectors like textiles and gems, traditionally rupee-weakness beneficiaries, remain cautious due to retaliatory tariff risks, creating a dual-edged impact across supply chains.
This volatility not only disrupts corporate planning but also weighs on consumer sentiment, as pass-through effects from pricier imports loom large for everyday goods.
Deepening External Vulnerabilities Exposed
Compounding these immediate pressures are structural challenges in India’s balance of payments, including a widening current account deficit strained by high energy import bills and softening service exports amid global slowdowns.
The rupee’s 1.69% monthly drop and 6.06% yearly erosion mirror broader trends, approaching the all-time peak of 90.56 recorded earlier in volatile periods. Finance ministry insiders, speaking off-record, emphasise that US tariff hikes targeting key Indian exports like electronics and automobiles have crimped portfolio inflows, which fell sharply in recent quarters as investors pivoted to safer havens.
Domestically, the RBI’s interventions through dollar sales have provided temporary ballast, yet reserves, while ample at over $650 billion, face depletion risks if depreciation accelerates.
Analysts point to interconnected factors: a hawkish US Federal Reserve stance elevating dollar strength, coupled with domestic monsoon variability affecting agricultural exports, painting a picture of multifaceted headwinds that demand nuanced policy responses.
Historical Context and Broader Ramifications
This episode echoes past currency crises, such as the 2022 slide triggered by similar external shocks, but arrives amid India’s post-pandemic recovery where growth has hovered around 6-7% despite headwinds.
Preceding months saw incremental weakening, with the rupee breaching 89 in November following US election outcomes that signalled protectionist trade policies under President Trump’s second term.
Post-event developments include heightened forex market liquidity strains, prompting interbank rates to spike and forward premiums to widen, signalling trader bets on further downside.
For Indian households, the fallout manifests subtly: remittances from overseas workers, a forex lifeline, gain value but fail to offset surging prices for gadgets, gold, and fuel.
Globally, this positions India alongside other emerging markets grappling with dollar dominance, underscoring the need for diversified forex reserves and deeper South-South trade linkages to mitigate such episodes.
Enhanced understanding of these dynamics equips readers to appreciate how currency movements intertwine with livelihoods, from Mumbai traders to rural remittance recipients.
The Logical Indian’s Perspective
The rupee’s distress signals a pivotal moment for India to champion economic resilience through inclusive strategies that prioritise dialogue over discord, self-reliance without isolation, and empathy across stakeholder divides.
Rather than reactive firefighting, authorities should foster transparent consultations with industry, farmers, and workers to craft trade diversification pacts that safeguard jobs and affordability, embodying principles of harmony and coexistence amid global flux. By investing in green exports, digital services, and skill-building for youth, India can transform vulnerability into vigour, ensuring growth benefits ripple to the margins.
