Rupee’s Rollercoaster: India’s Currency Hits 2025 Low Amid Global Uncertainty

The Indian Rupee (INR) endured its worst single-day fall since May 2023, closing 0.4% lower at 86.0025 per US dollar on Thursday, compared to its previous close of 85.6375. This marks the weakest level for the currency since April 11, 2025, and signals renewed volatility in the foreign exchange market.

Key Highlights:

The rupee breached a critical support level of 85.80, plunging to an intraday low of 86.1025 before settling at 86.0025, weighed down by persistent capital outflows and a surge in dollar demand from importers and corporates.

Thursday’s slide follows mounting concerns over geopolitical tensions and a cautious risk environment, which have prompted investors to seek the safety of the US dollar.

Market participants cited that the Reserve Bank of India (RBI) likely intervened via state-run banks to stem further losses, but the intervention was not enough to prevent the rupee’s decline.

The rupee’s sharp fall comes on the heels of a previous major drop in early May, when the currency had logged its worst single-day loss in over two years amid escalating border tensions with Pakistan.

Analysts note that the rupee’s weakness is exacerbated by outflows from domestic equities and a firming US dollar index, which has rebounded above 100 as global trade sentiment improves.

Despite the current volatility, some analysts remain optimistic for the medium term, with BofA Research forecasting a potential rupee recovery to 84 per dollar by December 2025, citing improving capital inflows and trade engagement.

The rupee’s latest tumble highlights the currency’s vulnerability to external shocks and underscores the importance of vigilant policy intervention as global and regional uncertainties persist.

Sources: Reuters, Business Standard, Financial Express