India Rupee Recap 2025: Down Over 4% YTD Amid Trade and External Pressures

The Indian rupee has remained under pressure through 2025, reflecting a combination of global and domestic factors. Heightened uncertainty around India–US trade negotiations, portfolio outflows and a widening current account deficit have weighed on sentiment.

These pressures have pushed the currency to record lows against the US dollar, placing it among the weaker performers in the region this year.

USD/INR 2025 Year-to-Date Performance

So far in 2025, the rupee has weakened by approximately 4.8% against the US dollar. While short-term movements have been mixed, with modest gains over the past one and three months, the broader trend remains negative. 

On an annual basis, the currency is down over 5%, putting it on course for its sharpest yearly decline since 2022.

Recent Movement in the Rupee in December

The rupee crossed the 91-per-dollar mark for the first time in December, extending its decline for a fourth consecutive session. It fell around 0.3% to trade near 91.08, continuing a trend that began earlier in the month when the currency slipped past the 90 level.

Increased hedging demand and foreign portfolio outflows added to downward pressure.

Trade Negotiation Uncertainty Weighs on Rupee

One of the key factors affecting the rupee has been the delay in concluding a trade agreement between India and the United States. 

India remains among the few major economies without such a pact, and the prolonged negotiations have weighed on investor confidence. 

Elevated US tariffs, in some cases reaching 50%, have reduced export competitiveness and dampened foreign investment flows.

Current Account Deficit Concerns

Concerns over India’s external balance have also resurfaced. The current account deficit widened to around $12.3 billion, or 1.3% of GDP, in the second quarter of FY26. 

Higher imports, driven in part by elevated gold and silver prices, have increased the import bill, while export growth has been constrained by tariff-related challenges.

Broader Economic Context

Although recent GDP data pointed to resilient growth, it has not been sufficient to offset external headwinds facing the currency.

Global dollar strength, coupled with trade-related uncertainty, has continued to influence rupee movements more than domestic growth indicators.

Read More: Silver ETFs 2025 Recap: Multiple Funds Deliver Over 100 Percent Returns.

Conclusion

The rupee’s performance in 2025 reflects sustained external pressures rather than short-term volatility alone. Trade negotiations, capital flows and the current account position are likely to remain key drivers in the near term. The currency’s trajectory will depend on how these factors evolve alongside broader global financial conditions.

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