Overview
- The rupee is down about 5% in 2025 and last week broke past 90 per dollar to a new low, touching 90.42 before easing slightly.
- The Reserve Bank of India has been intervening in spot and forward markets to curb disorderly moves while keeping the exchange rate market-driven.
- Reporting and interviews tie the pressure to steep US tariffs on Indian goods, delayed clarity on a US‑India trade deal, weaker FDI trends and foreign portfolio outflows.
- RBI analysis suggests a 5% depreciation lifts inflation by roughly 35 basis points, and with October retail inflation at 0.25%, analysts do not expect hawkish rate action.
- Export earners such as IT services, pharmaceuticals and textiles may benefit, while import-reliant sectors like autos, electronics and renewables face cost pressures; households have limited hedging options but can use dollar-linked assets and the $250,000 Liberalised Remittance Scheme.