Indian Rupee Logs Worst Single-Day Slide in Nearly a Month, Hits Record Closing Low of 88.7550 Against US Dollar

The Indian rupee experienced a sharp depreciation on September 22, 2025, marking its worst single-day fall in nearly a month. The currency closed at a record low of 88.7550 against the US dollar, slipping by 0.5% in a session dominated by heightened market volatility and external pressures.

 

Market Context and Drivers of Rupee Weakness

The rupee’s plunge reflects a convergence of factors unsettling investor confidence. Key among them are escalating US tariffs on Indian goods, recent hikes in H-1B visa fees impacting the technology export sector, and persistent foreign portfolio outflows amid global economic uncertainties.

 

The aggressive US tariff regime, which includes duties as high as 50% on select Indian imports, has caused concern among traders and businesses, with analysts estimating significant economic headwinds for India’s exports and trade balance. This has resulted in capital flying out of Indian markets, creating sustained selling pressure on the rupee.

 

Additionally, increased demand for the US dollar internationally, alongside expectations of tighter monetary policies by the Federal Reserve, has further contributed to the rupee’s depreciation.

 

Impact on Markets and Economy

The rupee’s decline intensifies import costs, notably for crude oil, which remains a major component of India’s import bill. This impact on the currency can lead to imported inflation and wider trade deficits. However, a weaker rupee can potentially aid exporters by making Indian goods cheaper overseas, partially offsetting tariff-related losses.

 

Indian equity markets mirrored the cautious mood, with declines in sectors closely tied to foreign inflows and global linkages, especially information technology.

 

RBI’s Response and Outlook

The Reserve Bank of India (RBI) maintained an active presence in the forex market to moderate excessive volatility. While the RBI has permitted more exchange rate flexibility this year as part of its inflation-targeting and monetary policy framework, regulators remain vigilant against sharp rupee swings that can destabilize financial systems.

 

Foreign exchange strategists suggest the rupee could face extended pressure near current levels unless there is an easing of trade tensions or a significant change in global capital flow dynamics. Many forecasts see the rupee trading between 88-90 against the US dollar through the remainder of 2025.

 

Broader Global and Geopolitical Dynamics

Geopolitical tensions in Asia, supply chain disruptions, and concerns related to US interest rate policy remain overarching narratives driving currency and capital market trends globally. The interplay between US-China trade dynamics and emerging markets’ growth prospects continues to influence investor sentiment and currency valuations, including the INR.

 

Investor and Corporate Sentiment

Increased hedging activity and caution among corporate treasuries have kept rupee volatility somewhat controlled despite the record declines. Some companies have accelerated forward buying of dollars to buffer imported inflation risks.

 

Financial analysts advise investors to adopt a carefully hedged approach given elevated currency risk and global uncertainties.

 

Sources: Reuters, Economic Times, Moneycontrol,  NSE India, Indian Express, NDTV Business, CNBC, Bloomberg and Yahoo Finance