India’s Rupee Weakness in 2025 and Its Impact on Prices and Incomes in India

The rupee has emerged as Asia’s weakest currency in 2025 as US tariffs and sizeable foreign investor outflows weigh on sentiment. This slide comes despite stable domestic indicators and is now influencing prices and income patterns across India. 

Why the Rupee Is Under Pressure in 2025 

The currency’s weakness stems from higher US tariffs on Indian exports and uncertainty around an Indo US trade deal, which have triggered notable foreign portfolio withdrawals. India’s growth, inflation, and reserve levels remain steady, suggesting that external shocks and capital flows rather than domestic deterioration are driving the current downtrend. 

How the Weak Rupee Influences Prices 

A weaker rupee increases the cost of imports in INR (₹) terms. This affects crude oil, fertilisers, electronics, and other essential imports, adding to input costs and raising the risk of imported inflation. With food inflation currently low, headline inflation remains contained, but persistent currency weakness can lift prices if elevated import costs continue. 

Read More: Rupee Falls Below 89 per Dollar: Reasons Behind the Drop and Its Implications! 

Impact on Incomes and Different Groups 

Export oriented sectors, including IT and services, benefit as USD ($) earnings translate into higher INR (₹) revenues. Households receiving remittances also gain. In contrast, companies with unhedged USD ($) borrowings and industries dependent on imported materials face margin pressure, which may influence investment plans, wages, and employment conditions. 

Conclusion 

The rupee’s weakness in 2025 largely reflects global frictions and capital outflows. Its effects differ across sectors, raising costs for some while supporting earnings for others, and the outlook remains tied to external conditions. 

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