Indian Rupee Hits Record Low at 88.76 vs US Dollar

The Indian Rupee hit a new record low against the US dollar, dropping 48 paise to 88.76 on September 23, 2025. This marks a significant depreciation of the currency, driven largely by rising concerns over US policies such as increased H-1B visa fees and ongoing tariff tensions. These developments have unnerved investors and increased dollar demand, placing pressure on the Rupee amidst already weak foreign inflows.

On Tuesday, the Rupee fell sharply in mid-day trading to 88.76 against the US dollar, marking its weakest point ever. This decline continued a recent downward trend influenced by multiple economic and geopolitical factors. One notable trigger was the US government's hike in H-1B visa application fees, which has raised concerns about potential impacts on remittances and profitability in India's IT sector. Since the IT sector is a major recipient of foreign investments, worries about lower inflow have led to increased selling of Indian equities by foreign portfolio investors (FPIs), resulting in more demand for dollars and a weaker Rupee.

Additionally, tariffs imposed by the US on Indian goods have further unsettled the currency market. These tariffs reduce India's export competitiveness, discourage foreign investment, and increase uncertainty in trade relations. Investors tend to pull money out or move it to safer assets in such scenarios, adding to the pressure on the Rupee.

The Rupee’s slide is also a reflection of deeper global and domestic factors. Globally, the US dollar remains strong against various currencies due to investor preference and expectations of interest rate changes by the US Federal Reserve. Domestically, foreign institutional investor outflows from Indian equities have risen significantly, with billions of dollars withdrawn this year alone.

Furthermore, the Reserve Bank of India (RBI) has reportedly reduced its intervention in the foreign exchange market, allowing the Rupee to face more volatility. Large outflows coupled with heightened cautiousness in India’s trade environment have created a supply-demand imbalance for the Rupee.

For everyday people, a weaker Rupee means imported goods, including fuel and electronics, may cost more. It also affects travel costs abroad and can contribute to inflationary pressures within the Indian economy. On the positive side, a weaker currency can boost exporters by making Indian goods cheaper and more competitive globally, though this benefit may be limited in the near term due to uncertainties from tariffs.

For businesses, especially in IT and export sectors, the currency depreciation adds complexity to managing costs and revenues. Foreign investors will watch closely how these developments affect India’s economic fundamentals and policy responses.

Analysts forecast that the Rupee may continue to face pressure in the coming months unless there is progress in easing trade tensions or a calming of global financial market volatility. Some projections suggest the Rupee could weaken further to around 89 per US dollar by early 2026, though this depends on various factors including US policy decisions and India’s economic performance.

The RBI and government may respond with policy measures to stabilize the currency, such as intervening in forex markets or altering interest rates. The outcome of ongoing negotiations on trade barriers and visa policies will also be critical in shaping investor confidence and currency trends.

The record low of 88.76 for the Indian Rupee against the US dollar is a sign of multiple headwinds facing the Indian economy, including higher US visa fees, tariff-induced trade uncertainties, foreign investment outflows, and global dollar strength. While this situation presents challenges such as rising import costs and inflation risks, the full impact will depend on how India navigates these external pressures and domestic policy adjustments. For now, the Rupee’s fall serves as a reminder of the interconnectedness of global trade and economic policies with everyday financial realities in India.

With inputs from agencies

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