New Delhi, : India’s currency markets witnessed turbulence on Thursday as the Indian rupee plunged to an all-time low of 90.52 against the US dollar, driven by heavy FII withdrawals, a swelling trade deficit, and persistent global monetary tightening.
According to market data, foreign institutional investors pulled out $2.5 billion in November, intensifying pressure on the rupee. India’s trade deficit widened to $25 billion, further weakening sentiment. The Reserve Bank of India attempted to stabilize the slide with a $1 billion spot market intervention, but analysts believe the support may offer only temporary relief.
Currency strategists now warn that the rupee could touch 92 per dollar by the end of 2025 unless the US Federal Reserve signals rate cuts. The current downturn marks the sharpest depreciation since 2022, threatening to inflate India’s import bill—especially for crude oil, which meets 40% of the nation’s energy needs, and electronics. Economists estimate that the fall could add 0.5% to retail inflation (CPI) in the coming months.
Global and Domestic Pressures
The rupee’s weakness is amplified by the Fed’s hawkish stance, along with Mexico’s newly announced 50% tariffs on Asian imports starting April 2026, potentially hurting $5 billion worth of Indian exports. At home, economic momentum appears to be slowing, with IIP growth cooling to 3%.
Commerce Minister Piyush Goyal downplayed the long-term impact, highlighting progress in EU-India FTA negotiations and fresh global retail expansion, such as Tanishq’s new US store opening in Orlando, which may boost remittance flows.
Corporate leaders, including Tata Sons Chairman N. Chandrasekaran, urged Indian businesses to diversify trade settlement mechanisms, including increased yuan-denominated transactions with China, to reduce dollar dependency.
Markets React: Mixed Signals
Despite currency pressures, the Nifty 50 index surged past 26,000 on optimism surrounding potential future Fed easing. Domestic institutional investors (DIIs) helped cushion the selloff, pumping ₹1 lakh crore into equities to offset FII exits. Meanwhile, gold prices soared to ₹78,000 per 10g, becoming a preferred hedge for investors.
India’s startup ecosystem continued its momentum, adding seven new unicorns in 2025, according to DPIIT. However, an inequality report flagged that the top 10% of Indians control 58% of national income, linking currency instability to “jobless growth” affecting nearly 50 million young workers.
The Road Ahead
Goyal reiterated India’s ambition to achieve $1 trillion in annual exports by 2030, driven by Production-Linked Incentive (PLI) schemes expected to generate ₹17 lakh crore in output. Still, for households, the immediate outlook remains challenging, with fuel prices projected to rise up to 5%.
HDFC economist Abhishek Banerjee advised individuals to consider hedging strategies such as dollar-denominated bonds. Analysts warn that the rupee crisis could become a pivotal test of Prime Minister Narendra Modi’s $5 trillion economy vision, demanding bold fiscal and structural reforms to navigate global uncertainties.
