The Indian rupee continued its slide against the US dollar on Thursday, hitting a record low of 90.43 in early trade. The currency crossed the psychologically significant 90 mark on Wednesday, reaching an intraday low of 90.29 before closing at 90.19.
According to an analysis by the State Bank of India (SBI) research team, this represents the fastest Rs 5 decline against the dollar in recent history, with the rupee falling from 85 to 90 in under a year, despite repeated interventions by the Reserve Bank of India (RBI). Unlike the stock market index, the rupee remains highly sensitive to external factors such as Foreign Portfolio Investment (FPI) withdrawals, a large trade deficit driven by high-cost imports of oil, metals, and electronics, and the strength of the US dollar.
Since April 2, following the announcement of reciprocal tariffs by the US, the rupee has depreciated by 5.5%. Foreign portfolio investors have pulled out over $17 billion this year, while private equity firms have cashed out through large IPOs from major startups, intensifying capital outflows. Rising gold and silver prices have also contributed to record import bills and an elevated trade deficit in October.
Despite these developments, the government remains confident. Chief Economic Adviser V. Anantha Nageswaran stated that authorities “are not losing sleep” over the rupee’s decline and expects improvement in the currency next year. He also expressed optimism about foreign direct investment, projecting inflows may exceed $100 billion this year.
The depreciation of the rupee raises import costs across multiple sectors—from petroleum to consumer electronics—contributing to inflationary pressures and increasing expenses for international education, healthcare, and tourism. Conversely, it benefits overseas remittances and export revenues, offering some relief amid challenges from high US tariffs.
Experts note that while a weaker rupee carries inflation risks, a managed depreciation can help the central bank tackle multiple economic challenges. Benefits include boosting dollar-denominated share values, managing the current account deficit, and preserving foreign exchange reserves.
Source: Times of India
Bd-pratidin English/ Jisan
