Rupee Hits Historic Low, Breaches 90 Against U.S. Dollar

The Indian rupee has hit an all-time low, exceeding 90 against the U.S. dollar for the first time on December 3, 2025. Ongoing global and local pressures are still affecting the currency. The rupee started at 89.96 and quickly dropped to 90.1325 against the dollar. This is the weakest level ever noted in the country's financial history. This sharp decline takes place amid stalled India-U.S. trade talks, significant foreign portfolio investor (FPI) outflows, and an increasing trade deficit. These factors have all hurt confidence in the domestic currency. 

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Reasons Behind the Slide 

The depreciation is caused by a mix of structural and market-specific factors. India's trade deficit reached a record $41.7 billion in October 2025. This rise increased the demand for U.S. dollars for import payments and put downward pressure on the rupee. At the same time, uncertainty about the India-US trade deal has lowered investor confidence, resulting in a surge of speculative selling of the rupee. The Reserve Bank of India (RBI) has taken a hands-off approach in recent weeks. It has chosen not to intervene aggressively, which has added to the currency's decline. 

Impact on the Economy 

The sharp decline of the rupee is affecting many parts of the economy. Imports, especially crude oil, electronics, and essential goods, have become much more expensive. This rise is pushing up inflation and adding more pressure on household budgets. Businesses that depend on imported raw materials face higher production costs. Consumers are also feeling the effects, with clear price increases on imported goods and services. The costs for studying abroad, traveling overseas, and receiving medical treatment outside India have risen too, affecting many middle- and upper-income groups. 

While exporters may gain from a weaker rupee since it makes Indian goods cheaper for foreign buyers, the overall effect is being offset by slowdowns in global demand and disruptions in supply chains. Companies with foreign currency loans are also feeling the pressure, as their debt servicing costs have risen. The depreciation has made the Reserve Bank's task of managing inflation and interest rates more challenging, especially as global monetary policy remains uncertain. 

Market Sentiment and Outlook 

Market participants expect the rupee to remain under pressure in the near term. As per news reports, analysts cited ongoing uncertainty around the India-U.S. trade deal and receding FPI interest as key reasons for the continued weakness. The Reserve Bank of India is set to announce its interest rate decision later this week, but any rate cut could further fuel selling pressure, while a stronger dollar and global volatility are likely to keep the rupee near the 90-mark until at least December 25. 

The rupee's drop to 90 against the US dollar shows the weaknesses in India's external sector. It highlights the need for policy changes and structural reforms to stabilise the currency and support long-term economic growth.