As of early December 2025, the Indian Rupee (INR) has reached a historic low against the U.S. dollar, trading at 90.42 INR/USD. This represents a significant 5% depreciation over the past year, driven by several key factors that indicate a challenging economic landscape for the currency.
Analysts attribute much of this decline to a widening trade deficit, which has been exacerbated by a steep 50% tariff imposed by the United States on Indian exports. This situation has heightened demand for foreign currency, ultimately putting additional pressure on the rupee. Furthermore, significant foreign investment outflows, amounting to nearly $17 billion thus far in 2025, have also contributed to the currency's weakness, reinforcing market sentiment that favors foreign currencies over the INR.
Additionally, the Reserve Bank of India (RBI) has shifted its policy stance in response to these challenges. It appears to be adopting a more tolerant approach towards a weaker rupee, focusing on stabilizing the currency rather than aggressively defending a specific exchange rate. This shift in strategy aims to address issues such as declining dollar inflows while managing volatility in the currency market.
In terms of recent exchange rates, the INR's performance against major currencies shows variability. The INR to USD is currently at 14-day highs near 0.011166, slightly below its 3-month average. Meanwhile, the INR to Euro is reported at 0.009531, reflecting a position 1.3% below average. The INR to GBP is similarly situated at 0.008349, 1.3% under its 3-month average, while the INR to JPY is showing strength at 14-day highs near 1.7611, which is 2.2% above its average.
Markets and currency experts indicate that without a prompt resolution regarding U.S.-India trade relations, the rupee could face further downside pressure, with forecasts suggesting potential movements towards 92 INR/USD in such a scenario. Businesses and individuals engaged in international transactions should remain vigilant and consider these factors when planning their currency exchanges.
