The Indian rupee has slipped below the ₹90-per-dollar level for the first time, marking a turning point in the country’s economic narrative. Although the immediate fall from the previous day’s value of ₹89.94 appears modest, the breach of this psychological threshold carries deeper economic meaning. It reflects shifting perceptions of India’s economic strength, changes in policy strategy, and growing stress in the external environment.

Why the Rupee Fall Matters for Indians

A weaker rupee increases the cost of imported goods, and India’s dependence on global suppliers means this depreciation quickly affects daily life. The rise in import bills for crude oil, electronics, fertilizers, and edible oils eventually translates into higher retail inflation. As a result, consumers face more expensive petrol, LPG cylinders, cooking oil, and other essential items. Imported devices such as smartphones, laptops, and home appliances have also become costlier, adding pressure to household budgets at a time when wages are not rising at the same pace.

Impact of Weaker Rupee on Education, Travel, and Borrowing

Students studying abroad are among the most affected groups. Tuition fees calculated in dollars now require significantly more rupees than they did just a year ago. For instance, a programme costing $50,000 annually now comes to about ₹45 lakh, compared to ₹40 lakh when the exchange rate was ₹80 per dollar. This increase has widened the financial burden on middle-class families and has also pushed up repayment amounts for those holding dollar-denominated education loans. Similarly, foreign travel has become more expensive, as every component—from airline tickets to hotel stays—is priced in foreign currency.

What Drove the Rupee Value Down?

Trade Tensions and Tariffs

One major factor behind the rupee’s decline is the deterioration in trade relations with the United States. Recent negotiations yielded little progress, and subsequent tariff hikes on Indian exports—some rising by as much as 50%—dampened investor confidence. The increased duties reduced export competitiveness and lowered expected foreign exchange earnings, contributing to the rupee’s downward pressure.

Withdrawals by Foreign Investors

Foreign portfolio investors have pulled out nearly $17 billion from Indian equities in 2025 alone. These outflows have put additional strain on the currency by reducing dollar inflows. Interestingly, this has occurred despite relatively stable domestic inflation and steady GDP growth, indicating that external uncertainties and global risk perceptions are exerting stronger influence than domestic fundamentals.

A Policy Shift at the Reserve Bank of India

The Reserve Bank of India has shifted towards a more flexible exchange-rate management approach. The International Monetary Fund recently reclassified India’s currency regime from a “stabilized arrangement” to a “crawl-like system,” suggesting that instead of defending a fixed level, the RBI is allowing the rupee to gradually adjust to market forces. This strategic change prioritizes long-term stability, rather than using large reserves to aggressively defend any specific value. With approximately $690 billion in foreign exchange reserves, the RBI possesses the capacity to intervene but currently prefers a measured, hands-off approach.

Why This Episode Is Different

Not a Dollar-Strength Story

Unlike previous phases of depreciation, particularly in 2022, the current fall in the rupee is not primarily driven by a global surge in the US dollar. The dollar itself has remained comparatively steady. This suggests the decline is rooted more in India-specific challenges such as trade pressures, weaker capital flows, and shifting policy dynamics.

India’s Strong Reserve Position

India’s foreign exchange reserves are near historic highs. This places the country in a stronger position than during earlier crises such as the 2013 taper tantrum or the 2018 crude oil spike. This cushion allows policymakers to adopt a long-term perspective and avoid panic-driven measures.

Voices from Global Markets

Several global analysts have raised concerns about the rupee’s performance. Bloomberg has labelled it Asia’s weakest currency this year. Currency strategists warn that if the rupee closes above the ₹90 level consistently, speculative bets could push it toward ₹91. Some fund managers argue that the depreciation reflects deeper issues such as a widening trade deficit, slowing nominal GDP growth, weakening FDI inflows, and persistent selling by foreign investors in domestic equities. These trends collectively point to structural pressure rather than temporary volatility.

How Everyday Life Is Being Reshaped

Rising Inflation and Costlier Essentials

The depreciation of the rupee has direct consequences for inflation. Since India imports the majority of its crude oil and a substantial share of its edible oils, any fall in the rupee raises import costs. This feeds into fuel prices, cooking oil rates, LPG cylinder costs, and eventually the prices of a wide range of essential goods. For lower- and middle-income families, the squeeze on monthly budgets has become increasingly noticeable.

Financial Stress for Families and Students

Families supporting students abroad are experiencing significant stress. A student loan taken when the exchange rate was ₹80 now requires 12–13% more repayments in rupee terms, even though the dollar amount remains unchanged. Households earning around ₹1.5 lakh per month are finding it harder to meet increased EMI obligations without cutting back on essentials or dipping into savings.

Impact on Small Businesses

Small and medium enterprises that depend on imported machinery, components, or overseas travel face increased costs. These pressures are compressing profit margins, especially for firms that are unable to pass on higher costs to consumers.

Do Exporters Benefit from a Weak Rupee?

While a depreciated currency typically boosts export competitiveness, the current scenario offers mixed outcomes. IT services and business process firms earning in dollars are seeing margin benefits, though many have hedged their currency exposure, limiting immediate gains. Pharma companies receive more rupees per dollar earned but face rising costs for imported raw materials. Traditional export sectors such as textiles should normally gain from a weaker rupee, but steep US tariffs are eroding these potential advantages, reducing the net benefit.

A Bright Spot: Remittances

India continues to be the world’s largest recipient of remittances, receiving over $137 billion in 2024. For families dependent on transfers from relatives abroad, the rupee’s depreciation has provided a lift. A monthly remittance of $500 now brings in around ₹45,000, compared to ₹40,000 earlier. This additional income is proving valuable for rural households and those with lower earnings, often supporting education, healthcare, and small financial investments.

Preparing for the Way Forward

Given the uncertain global environment and the RBI’s more flexible approach, many financial planners advise households to prepare for the possibility of further depreciation. Some consultants recommend planning future expenses with an assumed rate of ₹93–95 per dollar for 2026. Families facing foreign-currency obligations are being encouraged to consider hedging strategies or staggered payments to reduce volatility. At the same time, investment diversification—including exposure to global funds or export-oriented sectors—may offer natural protection against currency risk.

Conclusion

The rupee’s slide past ₹90 marks a significant moment in India’s economic evolution. Rather than aggressively defending this threshold, policymakers are focusing on long-term resilience and structural adjustments. However, the consequences of this shift are already being felt by millions of households, students, and businesses. The depreciation reflects both global uncertainties and domestic pressures, and its impact is likely to shape financial decisions for Indian families well into the coming year.