Image Source: India Today
In a dramatic turn for India’s currency markets, the Indian rupee (INR) plunged to an all-time low of ₹87.95 against the US dollar in early trade on February 10, 2025. The sharp depreciation marks a 45 paise drop from its previous close and reflects a confluence of global and domestic pressures. Forex traders and analysts warn that the rupee may remain under pressure for weeks, with the psychological barrier of ₹88 now within reach.
Key Highlights
Rupee hits record low of ₹87.95 against the US dollar at the interbank forex market
Fall triggered by global trade tensions, strong dollar index, and weak domestic equities
RBI rate cut and expectations of further easing added to downward pressure
Importers rushed to secure dollars, while foreign banks engaged in aggressive dollar buying
Analysts forecast rupee to trade between ₹87.70 and ₹88.10 in the near term
What Triggered the Slide?
The rupee’s decline was primarily driven by three global developments:
US Tariff Shock President Donald Trump signed executive orders imposing 25 percent tariffs on steel and aluminium imports, including from India. The move sparked fears of a renewed trade war, prompting a surge in the US dollar and a sell-off in Asian currencies2.
Dollar Strength The dollar index, which measures the greenback against six major currencies, rose to 108.28, its highest in months. This strength made the dollar more attractive, leading to capital outflows from emerging markets like India.
China’s Retaliation China responded with reciprocal duties, escalating trade tensions and further weakening regional currencies. The rupee, which often moves in tandem with the Chinese yuan, felt the ripple effect.
Domestic Factors Amplifying the Pressure
While global cues were dominant, domestic developments added fuel to the fire:
The Reserve Bank of India (RBI) cut interest rates by 25 basis points on February 7 and signaled another cut in April to support growth. Lower rates tend to reduce the appeal of a currency to foreign investors.
Domestic equities opened sharply lower, with the Sensex down 426 points and the Nifty falling 134 points, reflecting investor nervousness.
Importers scrambled to buy dollars fearing further depreciation, while exporters adopted a wait-and-watch approach.
RBI Governor Sanjay Malhotra stated that the central bank is not concerned with day-to-day currency fluctuations and focuses on medium- to long-term stability.
Market Sentiment and Outlook
The rupee’s fall has raised concerns across sectors:
Importers, especially in oil and electronics, face higher costs
Exporters may benefit in the short term but worry about volatility
Foreign Institutional Investors (FIIs) may reduce exposure to Indian assets amid uncertainty
Anshul Chandak, Head of Treasury at RBL Bank, noted that macroeconomic indicators are stacked against the rupee and expects continued pressure for the next 6–8 weeks.
Anil Kumar Bhansali of Finrex Treasury Advisors added that the ₹88 mark could be breached soon, especially if RBI allows further weakness to support exports and growth.
Conclusion
The Indian rupee’s slide to ₹87.95 against the US dollar underscores the fragility of emerging market currencies in a volatile global environment. With trade tensions escalating and domestic policy easing, the currency may remain under stress in the near term. For policymakers, importers, and investors, the challenge now lies in navigating this turbulence with strategic foresight and fiscal discipline.
Sources: India Today
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