The Indian rupee recorded another big fall on Thursday, hitting a record low of 90.4675 against the US dollar. This level crossed the previous lowest of 90.42 recorded on December 4. To stop the continued decline of the rupee, the Reserve Bank of India (RBI) intervened in the market to prevent the currency from weakening further.
Huge fall in rupee in 2025
2025 has proven to be a challenging year for the rupee. The currency has fallen by more than 5% so far this year, making it the third-worst performing currency among the world’s 31 major currencies. Only the Turkish lira and the Argentine peso have fared worse. The special thing is that this decline is happening when the Global Dollar Index has weakened by more than 7%.
Why did the rupee weaken?
Many factors are responsible for the fall of the rupee. India’s widening trade deficit, 50% tariffs imposed by the US on Indian exports, and capital outflows by foreign investors have all put pressure on the rupee. Additionally, stalled trade talks with the Donald Trump administration in the US have further added to the market uncertainty. The pressure on the currency has increased further as the rupee broke the psychological level of 90. The current exchange rate has reduced the value of the rupee by 50% compared to 2011.
RBI’s steps
The situation has posed challenges for RBI Governor Sanjay Malhotra and other central bank officials. They will have to strike a balance between maintaining the resilience of the rupee and ensuring market stability to prevent recurrence of financial instability.
Capital controls are still in place in India, which means the rupee is not fully convertible. In the international market, the rupee is traded mainly in the NDF (Non-Deliverable Forward) market, where settlement is done in dollars. The RBI intervenes in foreign markets through the Bank for International Settlements (BIS), which works with major banks in Singapore, Dubai and London.