New Delhi – The Indian currency breached a psychologically significant threshold on Wednesday as the India rupee falls past the 90-per-dollar mark for the first time in history. The rupee weakened to an all-time low of 90.14 per US dollar, surpassing its previous record low of 89.9475 hit just a day earlier, marking the sixth consecutive daily decline for the beleaguered currency.
Historic Depreciation Amid Economic Divergence
The India rupee falls to unprecedented levels despite the country maintaining its position as the world’s fifth-largest economy with stronger-than-expected GDP growth. The rupee was last trading at 90.07, down 0.22 percent on the day, highlighting a stark divergence between India’s robust domestic economic fundamentals and its challenging external financial position.
This dramatic decline underscores how the India rupee falls despite positive domestic economic indicators, pressured instead by weak trade performance and deteriorating portfolio flows. The currency’s trajectory reflects the complex interplay between internal growth momentum and external financial vulnerabilities.
Worst Performing Asian Currency in 2025
The India rupee falls approximately 5 percent year-to-date, positioning it on track for its steepest annual decline since 2022. This performance has earned the rupee the unfortunate distinction of being the worst-performing Asian currency in 2025, lagging behind regional peers despite India’s superior economic growth rates.
According to Dhiraj Nim, an FX strategist and economist at ANZ, “Until there is a trade deal, this is the sort of economic adjustment that India requires.” ANZ projects that the India rupee falls could continue, with forecasts suggesting the currency may weaken to 91.30 by the end of next year, assuming current US trade tariffs remain unchanged. The bank warns this depreciation could materialize even sooner than anticipated.
Massive Foreign Investment Outflows
A primary factor explaining why the India rupee falls so dramatically involves massive foreign capital flight from the country’s financial markets. Foreign investors have withdrawn approximately $17 billion from Indian equities throughout 2025, representing a substantial loss of confidence in the market.
Beyond equity outflows, net foreign direct investment flows have remained persistently weak, failing to provide the capital account support traditionally relied upon to stabilize the currency. The India rupee falls further as external commercial borrowings have also remained soft, demonstrating how broad-based capital outflows have intensified pressure across multiple channels.
Record Trade Deficit Compounds Pressure
The capital account strain occurs simultaneously with a widening trade deficit that reached a record exceeding $40 billion in October. This surge in the trade deficit has fundamentally altered the underlying demand-supply balance for dollars in the Indian market, creating additional downward pressure as the India rupee falls against sustained dollar demand.
Sat Duhra, portfolio manager at Janus Henderson Investors in Singapore, explained the comprehensive nature of the challenge: “The weak macro picture in India makes weak currency performance inevitable. There has been a slide in so many data points recently—rising trade deficits, weakening nominal GDP growth, weak FDI and foreigners selling down domestic equities.”
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Central Bank’s Staggered Defense Strategy
As the India rupee falls to historic lows, the Reserve Bank of India’s intervention strategy has notably shifted from its traditional aggressive defense posture. Four bankers familiar with the situation revealed that RBI intervention has been sporadic rather than sustained, allowing the currency to breach the psychologically important 90-per-dollar level.
The central bank has been intervening in short and staggered bursts in recent days rather than mounting a firm, comprehensive defense of the currency. This measured approach represents a departure from past practices where the RBI would more actively resist significant depreciation.
Strong Reserves Provide Intervention Capacity
Despite the limited intervention observed as the India rupee falls, the Reserve Bank of India maintains strong foreign exchange reserves that theoretically provide substantial capacity to stem the currency’s slide. The central bank’s reserves remain robust enough to support more aggressive intervention if policymakers determine such action is necessary.
However, the RBI appears to be carefully calibrating its response, balancing currency stability concerns against the need to preserve reserves and avoid fighting market forces that may require fundamental adjustment given India’s external account challenges.
Risk of Speculative Pressure
Anindya Banerjee, head of commodity and currency at Kotak Securities, emphasized the importance of strategic intervention even as the India rupee falls. “At this stage, it is essential for the central bank to prevent speculators from becoming too comfortable with a one-way trend, as that can trigger an unnecessary spike in USD-INR volatility,” Banerjee stated.
This warning highlights concerns that if market participants conclude the India rupee falls trajectory represents a one-directional trade with minimal risk, speculative positioning could accelerate depreciation beyond levels justified by fundamental factors.
Impact of US Trade Tariffs
The India rupee falls in part due to punitive US tariffs that have complicated India’s external trade position. These tariffs have contributed to the challenging trade balance and created uncertainty about future export performance, factors that weigh heavily on currency valuations.
Until resolution on trade policy emerges, analysts expect continued adjustment pressure as the India rupee falls to levels that better reflect the country’s external vulnerabilities despite strong domestic growth.
Outlook and Strategic Implications
As the India rupee falls continues making headlines, policymakers face difficult choices balancing currency stability, reserve preservation, and economic competitiveness. The coming months will reveal whether current depreciation represents necessary adjustment or the beginning of more serious currency instability requiring stronger policy response.
