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Currency Depreciation · FPI Outflows · Indian Rupee · Trade Tariffs
In early December 2025, the Indian Rupee (INR) breached ₹90 per US dollar, falling to a new record low of ₹90.4370 per USD, marking a 5.3% year-to-date depreciation and making it Asia’s worst-performing currency in 2025.
This decline is primarily attributed to a "trifecta of pressures" identified by Dr. Soumya Kanti Ghosh of SBI Research, including policy uncertainty from new US tariffs (India faces a 50% tariff, impacting $45 billion in exports), significant Foreign Portfolio Investor (FPI) outflows to higher-yielding US markets, and the Reserve Bank of India's (RBI) non-interventionist stance.
Additionally, a strengthening US Dollar Index (DXY) and speculative pressure from the offshore Non-Deliverable Forward (NDF) market contribute to the rupee's weakness. Despite the sharp fall, experts emphasize that India's trade deficit remains stable at $78 billion for April–October 2025, and the rupee exhibits low volatility (1.7%), indicating underlying economic resilience rather than domestic weakness.
