A Historic Slide — Rupee Crosses ₹90 for First Time

📉 A Historic Slide — Rupee Crosses ₹90 for First Time

On December 3, 2025, the Indian Rupee crossed the ₹90–per–US-dollar mark for the first time ever — a milestone that many had feared but hoped would never see.

The rupee touched an intraday low of around ₹90.30, before settling at ~₹90.19. The weakness continued — by December 4 it slipped further, opening at ~₹90.41 against the dollar.

This nearly vertical depreciation since early 2025 has made the rupee among the worst-performing major Asian currencies this year.

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🔎 What’s Driving the Decline — A Mix of Global & Domestic Pressures

Economists and market analysts attribute the rupee’s drop to a combination of factors — both external and internal structural pressures:

• Foreign capital outflows & investor sentiment: A large wave of foreign portfolio investors (FPIs) have exited Indian equity markets. Net foreign direct investment (FDI) has turned negative for consecutive months.
• Weak capital inflows + trade deficit surge: India’s merchandise trade deficit has expanded, largely due to high imports (oil, commodities, raw materials) and relatively weaker exports.
• Uncertainty around trade deals: The prolonged ambiguity around a India–US trade deal — and rising US tariffs on Indian goods — has sown caution among investors and hit rupee-valuations.
• Strong global dollar, rising import bills: With the US dollar strengthening (in part due to higher US interest rates), and elevated global commodity (oil, metals, gold) prices — India’s import costs have surged. That increases demand for dollars, pressuring the rupee.
• Limited intervention by central bank: The Reserve Bank of India (RBI) has intervened — but conservatively. The relatively restrained defence of the rupee, especially against rapidly evolving global headwinds, has added to depreciation pressure.

As one analyst summed up: the rupee isn’t crashing because India’s economy is suddenly weak — much of this drop reflects external shocks, global dollar strength, trade-deal uncertainty and capital flow reversals.

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⚠️ What It Means — For Businesses, Economy and Everyday People

The fall has broad and non-uniform implications:

• Imported goods become costlier: Everything from crude oil and fuel to electronics, machinery, raw materials, medicines, edible oils and other imports — costs go up when the rupee weakens.
• Inflation risks & higher cost of living: With more expensive imports, inflation — especially of essentials — could rise. That affects consumer buying power, particularly for lower- and middle-income households.
• Imported inputs raise business costs: Companies relying on imported fuel, components or raw materials may see their operating costs surge — potentially squeezing margins or passing on costs to consumers.
• Loans and debt servicing for foreign-denominated debt become heavier: Firms with debts in foreign currencies (or borrowing abroad) will see increased repayment burdens due to depreciation.
• Winners: exporters and foreign-earnings earners: On the flip side, exporters — especially companies paid in dollars — and Indians earning abroad or receiving remittances may benefit from the weaker rupee, getting more INR for the same USD amount.

In short: the pain is more immediate and real for ordinary consumers (higher prices, costlier essentials), and for businesses reliant on imports. Export-heavy firms and remittance-receiving households may fare better. The impact is uneven — prosperity vs pressure will depend on one’s economic tilt.

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🧮 Can We Read This as a Sign the Rupee (or India’s Economy) is Weak? — Not Entirely

Some experts urge caution before equating a falling rupee with a weak economy or weak currency in absolute terms. A few nuances:

• Despite depreciation, India’s recent inflation (CPI) has remained relatively low compared to many advanced economies — meaning the rupee’s real effective value may still be reasonable.
• According to a recent note by a leading bank, although the rupee has depreciated ~5–6% since April 2025, its volatility remains among the lowest in emerging-market currencies — meaning the slide is gradual, not panic-driven.
• The depreciation appears driven more by external and structural factors (global dollar strength, trade imbalances, capital flow reversal), rather than a sudden collapse of domestic economic fundamentals.

So while a falling rupee does raise red flags (inflation, cost-pressure, import dependence), it doesn’t necessarily mean that India’s economy is fundamentally weak. Rather, it reflects a challenging global macro environment + structural constraints.

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🔮 What Lies Ahead — Risks, Watchpoints & What to Keep an Eye On

• Some analysts warn that if current trends persist (capital outflows, trade deficit, global dollar pressure), the rupee could slip toward ₹95–₹100 per USD in the coming months — especially if no major positive shock (trade deal clarity, export boost) comes.
• The outcome depends heavily on external environment: global commodity prices (oil, metals), US interest-rate trajectory, trade deal progress, foreign-investment flows. Any external shock could worsen depreciation.
• On the domestic side, policy clarity — especially around trade agreements, foreign-investment regulation, and timely intervention by the RBI — could help moderate the fall or stabilise the rupee.
• For businesses and households: it may be wise to brace for costlier imports, inflationary pressures — and perhaps re-evaluate exposure to foreign-currency debt if any.

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📣 Final Thoughts — A Mixed Reality, Not a Crash

The fall of the rupee past ₹90 is indeed a watershed moment — it grabs headlines, rattles nerves, and carries real consequences in everyday life. But like many economic shifts, this is nuanced: part panic-driven, part structural, part a byproduct of global imbalances.

For many Indians — especially those reliant on imports, foreign debt, or not linked to export earnings — the pressure will be felt in everyday expenses. For exporters, remittance earners and certain sectors, there may even be a silver lining.

In the coming weeks and months, much will hinge on global developments (commodity prices, dollar strength), foreign-investment flows, and whether the domestic policy response (trade deals, RBI action) can anchor confidence.