The Indian rupee has fallen to its lowest level in history, breaching the 90-per-US-dollar mark this week. As of Friday, the currency closed at 89.95 against the dollar. The depreciation has raised concerns over its impact on the poor and middle-class households, who are expected to be the most affected by rising prices.
According to economic analysts, the fall in the rupee is being driven by international economic instability and multiple domestic pressures. The situation has intensified due to heavy foreign investment outflows. With the United States battling inflation, the Federal Reserve sharply increased interest rates, making the US market more attractive. As a result, foreign investors have withdrawn nearly 17 billion dollars — around Rs 1.5 lakh crore — from Indian stock markets since January, converting their funds to dollars and repatriating them. This large capital flight has increased pressure on the rupee.
Another major factor is the recent 50 percent tariff imposed on India by Donald Trump. Higher tariffs have made Indian exports to the US more expensive, reducing demand. As exports declined, the inflow of dollars into India also slowed. With foreign exchange reserves shrinking and dollar supply tightening, the rupee continued to weaken.
Rising international crude oil prices have further strained the economy. India imports about 85 percent of its crude oil requirement — roughly 1.7 billion barrels every year. In 2022–23, the country spent nearly Rs 12 lakh crore on crude oil imports when the exchange rate hovered around Rs 82.60 per dollar. Under current exchange conditions, importing the same quantity would cost almost Rs 2 lakh crore more. India’s dependence on imports for electronics, fertilizers and edible oils has also contributed to the continuous outflow of dollars.
A look at historical data shows the scale of the decline. In 1947, the exchange rate stood at Rs 3.30 per dollar. It rose to Rs 22.74 in 1991, Rs 44.94 in 2000, Rs 70.09 in 2018 and Rs 81.35 in 2022. By the end of 2025, the value has slipped to nearly Rs 90 per dollar, prompting concern among economic experts. Attention is now focused on the Reserve Bank of India and the measures it may take to stabilize the currency.
The depreciation is expected to increase the prices of imported goods such as crude oil, electronics, gold, medical equipment and other essential items. Petrol, diesel and LPG prices are likely to rise due to higher import costs. Transportation costs will go up, pushing retail prices across sectors. Overseas education and travel are set to become more expensive, placing additional burden on families. Meanwhile, interest payments on foreign loans for both Indian companies and the government are expected to rise, increasing financial pressure.
Economists say strengthening the rupee will require boosting growth in agriculture, industry and services. They stress the need for easier policies to attract foreign companies to set up operations directly in India. Reducing dependence on imports and offering support to small and medium industries could improve domestic production and employment. Increasing exports and strengthening foreign exchange reserves are seen as long-term measures to stabilize the Indian economy and reinforce the rupee.