By Suresh Unnithan
In the turbulent scenery of global currencies, the vulnerability of emerging economies is exposed as starkly as the Indian rupee’s relentless decline against the US dollar. As of November 26, 2025, the INR trades around 89.20, having earlier hit a historic low of 89.66, and now stands perilously close to the psychologically critical 90 mark.
This weakening is far more than a statistic on trading screens—it functions as a hidden tax on every Indian household and business. With India importing roughly 85% of its crude oil, along with large volumes of electronics, pharmaceuticals, and gold, every one-rupee fall adds tens of thousands of crores to the nation’s import bill, pushing up prices of fuel, cooking gas, medicines, and daily essentials almost immediately. These higher costs feed straight into broader inflation, steadily eroding real incomes, shrinking the value of salaries and fixed deposits, and hitting middle- and lower-middle-class families hardest.
At the same time, the trade deficit widens alarmingly. Although a cheaper rupee should make exports more competitive, India’s export sectors have not gained enough edge to offset the soaring cost of imports, leaving the current account deeper in the red and making foreign debt more expensive to repay. Companies that rely on imported raw materials or carry dollar-denominated loans face rising input and borrowing costs, which squeeze profit margins, discourage new investment, and stall the private capital expenditure the economy desperately needs.
Persistent currency weakness also shakes investor confidence, signaling deeper structural troubles. Foreign portfolio investors, already jittery, accelerate outflows from Indian stocks and bonds, creating a self-reinforcing spiral that drags the rupee still lower.
Analysts now caution that, without a dramatic reversal in capital flows or a breakthrough in long-pending US-India trade agreements, the rupee could cross 90 before the end of 2025 and move toward the once-unimaginable 100 level in the months that follow—a trajectory that would inflict profound and lasting damage on India’s economic stability.
The Rupee’s Structural Decline Since 2014
The rupee’s journey since the Bharatiya Janata Party (BJP)-led government came to power in 2014 has been one of steady erosion. When the NDA took office, the currency was around 60 to the dollar. What followed was a consistent weakening, accelerated by a series of domestic decisions and global shocks.
The trend in yearly average and year-end closing rates (compiled from RBI reference rates and market data) tells the story clearly:
| Year | Average USD/INR Rate | Year-End Close |
| 2014 | 61.03 | 63.33 |
| 2015 | 64.15 | 66.16 |
| 2016 | 67.20 | 68.69 |
| 2017 | 65.12 | 63.89 |
| 2018 | 68.39 | 69.41 |
| 2019 | 70.42 | 71.15 |
| 2020 | 74.10 | 73.09 |
| 2021 | 73.21 | 74.14 |
| 2022 | 78.60 | 82.72 |
| 2023 | 82.73 | 83.20 |
| 2024 | 83.50 | 84.75 |
| 2025 | 86.84 | 89.20 (Nov 2025) |
Over this eleven-year period, the rupee has depreciated by nearly 41% against the US dollar—a cumulative loss that outpaces most Asian peers despite India posting one of the fastest GDP growth rates in the world (around 6.5% in 2025). The 4.5% drop in 2025 alone has made the INR Asia’s worst-performing currency this year.
Immediate Economic Impacts: A Swelling Deficit and Household Squeeze
The rupee’s slide exacts a heavy toll on India’s $3.9 trillion economy. Every 1% depreciation adds roughly $10–15 billion to the annual oil import bill alone. With Brent crude above $80/barrel, the trade deficit is projected to widen to 1.2% of GDP in FY26 from 0.6% in FY25, pushing the current account deficit toward unsustainable territory.
Inflationary pressures are immediate: edible oils, pulses, fertilizers, fuel, and medicines all become costlier. Food and wholesale price indices have already risen 0.5–1% in recent months. For households, overseas education and travel costs have jumped 10–15% in dollar terms, while the real value of salaries and savings continues to shrink.
Corporates face margin compression on dollar debt, exporters gain only marginally (textiles and gems account for less than 20% of total exports), and the risk of a credit-rating downgrade looms if the CAD spirals further. Ten-year government bond yields have climbed above 7%, raising borrowing costs for everyone.
The RBI’s Role: Intervention or Inadequacy?
Despite holding the world’s fourth-largest forex reserves (~$650 billion), the Reserve Bank of India has been unable to arrest the slide. In 2025 alone, it has sold over $20 billion in spot and forward markets, yet the rupee still breached 89 and touched a record low of 89.66. Reserves are down 2% quarter-on-quarter, and offshore non-deliverable forwards continue to price in further weakness.
Critics call the RBI’s “calibrated” approach ineffective; defenders blame unrelenting external headwinds—hawkish Fed policy, China’s slowdown, and India’s structural dependence on imported energy. The debate rages on: should the central bank burn reserves more aggressively, impose temporary capital controls, or sell gold as it did in 2013? So far, the answer has been restraint.
Political Indifference and the Irony of Silence
The sharpest irony is political. In 2013, then Gujarat Chief Minister Narendra Modi famously declared the rupee was “on its deathbed” under the UPA, linking its fall to policy paralysis and corruption. Today, under his own prime ministership, the currency is 30% weaker than when he took office in 2014—and heading lower.
The government now attributes the depreciation solely to “global factors” and a “strong dollar,” while Finance Minister Nirmala Sitharaman insists the rupee is “market-determined” and dismisses concerns by pointing out that it has held up better against non-USD currencies. No comprehensive rupee-stabilization roadmap has emerged from the last three Union Budgets, and long-pending export incentives or import-substitution measures remain stuck.
Charting a Course Out of the Abyss
Short-term RBI interventions can provide temporary relief, but a sustainable reversal demands urgent structural action: faster conclusion of trade agreements, aggressive scaling of PLI schemes to reduce import dependence, curbs on non-essential imports (especially gold), and a renewed export push.
Without decisive political and policy resolve, the psychological barrier of 100 to the dollar is no longer a question of “if” but “when.” A currency once mocked as being on its “deathbed” in 2013 is now perilously close to that fate again—only this time, the silence from the very leaders who once weaponised its weakness is deafening.
In fact, the rupee’s plight is a clarion call for introspection. While RBI interventions provide short-term ballast, sustainable recovery demands political will: expediting trade pacts, boosting manufacturing under PLI schemes, and curbing non-essential imports. Without it, the 100-mark looms not as hyperbole, but inevitability—threatening to unwind hard-won gains and reignite the very blame games Narendra Modi once wielded so deftly. As the “deathbed” metaphor returns to haunt, India must decide: resurrect the rupee, or let it fade into economic folklore?
