Rupee Falls Past 90 per Dollar: A Four-Decade Slide Reaches a New Milestone

The Indian rupee has slipped past the mark of 90 per US dollar, reflecting pressures that have built up over many years. The move comes after months of weak capital flows, strong importer demand, and fresh hedging activity by companies worried about rising costs.

A Long Journey of Depreciation

The latest fall continues a gradual slide that started more than 40 years ago.

• In 1983, the rupee first moved beyond 10 per dollar.
• The sharpest drop came during the 1991 balance of payments crisis, when it crossed 20 and soon moved into the low 30s.
• By 1998, the currency crossed 40 amid the Asian financial crisis and sanctions after the nuclear tests.
• In 2008, it breached 50 as the global financial crisis hit emerging markets.
• The move past 60 in 2013 followed the taper tantrum and domestic economic stress.
• In 2018, it drifted towards 70 due to high oil prices and a stronger dollar.
• By 2022, during the Russia-Ukraine conflict, it crossed 80.

Now, after an eight-month weakening streak, the rupee has touched 90, making it one of Asia’s weakest currencies this year.

Why is the Indian Rupee (₹) Falling Now?

The current decline is driven by a mix of global and domestic pressures:

1. Weak Capital Inflows

Foreign portfolio investors have sold around US$17 billion of Indian equities this year. Even though India receives strong gross inflows, heavy selling in IPOs and private equity exits has pushed net flows into negative territory.

2. Declining Foreign Direct Investment

Net FDI has been negative for two months. Indian companies are buying more assets overseas, while foreign investors are repatriating earlier profits, reducing long-term inflows.

3. Record Trade Deficit

Merchandise trade deficit hit a new high in October due to increased gold imports and slowing exports. Importers have rushed to hedge more as the rupee weakens, while exporters are holding back dollars, worsening the imbalance.

4. US Tariffs and Global Uncertainty

High US tariffs on Indian goods have reduced export demand and discouraged foreign investors.

5. RBI’s Limited Intervention Space

The Reserve Bank of India has been selling dollars in both spot and forward markets. Forward positions have risen to around US$63 billion, showing the RBI’s efforts to slow the fall without stopping natural adjustment.

Read more: Nifty IT Gains as Rupee Breaches 90/$; Tech Stocks Rally Up to 2%.

Conclusion

The rupee’s drop past 90 reflects long-term structural challenges mixed with short-term pressures. While global cues offer occasional relief, weak flows, trade imbalances and hedging demand continue to drive volatility. A gradual adjustment may help stabilise the economy, but markets remain cautious as the currency enters a new trading zone.

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