Indian Rupee Falls Below 90 Against the Dollar for the First Time: What Is the Real Reason and What Is the Impact?
The foreign exchange market witnessed a historic moment this
week when the Indian rupee fell below 90 against the US dollar for the
first time in history. The fall was sharp, sudden, and seen as a psychological
barrier that India had never crossed before. Early Wednesday trade showed the
rupee touching ₹90.14 per dollar, marking an all-time low as reported by
Bloomberg and several leading financial newspapers.
This sharp depreciation of the currency has triggered concerns
from policymakers, economists, investors, and the common public. The fall does
not only affect the stock market or international trade, but it directly
impacts household budgets, fuel prices, travel costs, education expenses
abroad, and the overall economy.
Several economic factors, global developments, and domestic
policies together pushed the rupee to this level. To understand the full
situation, it is important to analyse the facts, expert opinions, and the
broader economic climate.
Major Reasons Behind the Fall of the Rupee
According to financial reports and currency experts,
multiple factors contributed to the rupee weakening.
1. Delayed Trade Agreement with the United States
The ongoing delay in concluding a major trade deal with the
US has created uncertainty in the foreign exchange market. This uncertainty has
limited investor confidence and reduced foreign capital inflow, contributing to
depreciation.
2. Foreign Portfolio Investors Withdrawing Money
Foreign investors have been selling shares in the Indian
market and transferring profits back to the United States. This movement
increases the demand for dollars and puts pressure on the rupee.
Financial analysts have confirmed heavy selling by foreign portfolio investors
(FPIs) over the last few weeks.
3. Limited Intervention from the RBI
According to market reports, the Reserve Bank of India has
not actively intervened to defend the rupee in recent weeks. While RBI has sold
dollars earlier to prevent extreme volatility, recent policy suggests the
central bank may be allowing the rupee to adjust naturally.
Economist Jayesh Mehta stated that the RBI may announce open
market operations worth ₹2 lakh crore and possibly a rate cut soon, which
may help stabilise the currency.
4. High Crude Oil Prices
Close to 90 percent
of the crude oil required in India is sourced through imports. Rising
global oil prices increase the import bill, requiring more dollars to make
purchases. This directly weakens the rupee further.
5. Strong US Dollar
The US dollar is gaining strength globally due to:
Strong US economic data
Higher US interest rates
Safe-haven demand amid global uncertainty
When the dollar strengthens globally, emerging market
currencies like the rupee come under pressure. This is one of the most
significant factors behind the decline.
Impact on the Indian Economy and Daily Life
This fall is not only a number on screen. It has a visible
and lasting impact on the daily lives of Indians, small businesses, industries,
and macroeconomic indicators.
1. Rise in Fuel Prices
A weaker rupee means imported crude oil becomes costlier.
This will increase the prices of petrol, diesel, LPG, and aviation fuel.
Transport cost will rise and it may trigger inflation.
2. Costlier Electronics and Imported Goods
India relies heavily on foreign suppliers for mobile phones,
laptops, medicines, edible oil, fertilizers, and industrial machinery. These
goods will now become more expensive.
3. Higher Education Costs for Students Abroad
For Indian students studying in the US or paying fees in
dollars, the financial burden will increase sharply.
For example:
Annual fee 50,000 dollars
At ₹80 per dollar: ₹40 lakh
At ₹90 per dollar: ₹45 lakh
That is a jump of ₹5 lakh per year, without any
change in tuition fee.
4. Higher Travel Expenses
A family travelling abroad or sending money for tourism,
health care, or business will feel the impact directly.
5. Loan Repayments Become Costlier
Those who took education loans or international loans denominated
in dollars will now repay more in rupee terms.
Who Benefits from the Weak Rupee?
While most areas see an impact, there are some beneficiaries
too.
1. Exporters
IT companies, textile exporters, pharmaceutical exporters,
and service-based companies earning in dollars will receive more rupee value
for every dollar earned.
2. Families Receiving Remittances
India receives the highest remittances globally. In 2024,
India received nearly 138 billion dollars from Indians working overseas.
A monthly remittance of 500 dollars:
Earlier value: ₹40,000
Now: ₹45,000
This benefits low-income and rural families relying on
overseas earnings.
Does This Mean India’s Economy Is Weak?
Experts say the current fall is not necessarily a sign of a
weak economy. India’s GDP growth is strong at 8.2 percent, foreign
exchange reserves remain high, exports are stable, and the domestic market is
expanding.
However, high dollar demand is overshadowing these strengths
for now.
This depreciation phase reflects global financial
adjustments rather than India’s economic failure.
What Should Individuals Do in This Situation?
Financial advisors recommend:
Plan international expenses early
Avoid taking loans in foreign currency
Consider forward contracts for tuition and business payments
Invest in short-term debt funds and fixed deposits
Diversify through global equity funds
Budget using a future exchange rate assumption of ₹93–₹95 per dollar
These steps can help reduce the financial impact.
The Indian rupee falling below 90 against the dollar
is a significant moment in India's financial history. It represents a changing
economic environment influenced by global forces, domestic policies, and market
behaviour. While the fall brings challenges, it also presents opportunities for
exporters, global businesses, and remittance receivers.
This development reminds India of the need to continue
strengthening economic fundamentals, boosting manufacturing, reducing import
dependency, and increasing global trade competitiveness.
For now, households, businesses, and policymakers will be
watching closely to see whether the rupee stabilises, recovers, or continues
its downward movement in the coming months.
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Frequently Asked Questions (FAQs)
1. Why is the Indian rupee falling against the US dollar?
The rupee is falling due to foreign investor withdrawals, rising crude oil
prices, demand for dollars, delay in trade agreements, and limited intervention
from the central bank.
2. Why is the US dollar getting stronger than the Indian rupee?
The US dollar is strengthening due to high interest rates in the United States,
strong US economic performance, and increasing demand for safe global
currencies.
3. Will the rupee recover soon?
Currency movement depends on multiple global and domestic factors. If crude oil
prices ease, foreign investors return, and RBI intervenes, the rupee may
stabilise, but uncertainty remains.
4. How does the rupee fall affect the common public?
Fuel, imported goods, electronics, overseas education, international loans, and
travel costs become costlier.
5. Who benefits when the rupee becomes weaker?
Exporters earning in dollars and families receiving remittances benefit because they get more rupees per dollar.
