The Indian Rupee (INR) breaching the ₹90 per USD level shocked financial markets, importers, and even everyday consumers. Currency depreciation is not a single-event phenomenon — it results from a series of global and domestic pressures that build up over months.
This in-depth blog post breaks down every major factor behind INR’s fall, supported with tables, data-style breakdowns, Q&A, and easy explanations.
Introduction
India’s currency has remained relatively stable for years, but 2024–2025 created a perfect storm:
- Wars
- High oil prices
- Strong USD
- FII outflows
- Global slowdown
INR slipping beyond ₹90 per USD is not a coincidence — it’s macroeconomics at work.
What Makes a Currency Fall?
A currency weakens when:
| Factor | What Happens | Effect on INR |
|---|---|---|
| High demand for USD | Imports, investors buy dollars | INR falls |
| Capital outflow | FII withdraw money | INR falls |
| Costly imports | More USD needed | INR weakens |
| Low export earnings | Less USD comes in | Depreciation |
| High inflation | Currency value erodes | Rupee drops |
Simple logic:
More demand for USD + less demand for INR = INR weakens.
Why INR Fell Beyond ₹90 — Major Reasons Explained
Strong US Dollar (USD at multi-year high)
USD is extremely strong due to:
- High US interest rates
- Strong US economy
- Investors running to safe-haven assets
When the dollar rises globally → INR automatically weakens.
Crude Oil Above $90–$100
India imports 85% of its oil.
| Oil Price | Impact on India | Impact on INR |
|---|---|---|
| $70–80 | Stable | Neutral |
| $90–100 | Import bill rises | INR weakens |
| $100+ | Inflation spike | INR falls sharply |
Oil alone can push INR down 2–4% in a few months.
Heavy FII Outflows
Foreign investors pulled out billions from Indian markets due to:
- Higher US returns
- Global risk aversion
- Profit booking
When FIIs exit → They sell INR → Buy USD → INR weakens.
Global Geopolitical Conflicts
Ongoing tensions:
- Russia–Ukraine
- Middle East escalation
- China–Taiwan concerns
These push investors to USD → hurting emerging currencies like INR.
High US Interest Rates
US Federal Reserve kept rates high to fight inflation.
| Country | Interest Rate Trend | Currency Effect |
|---|---|---|
| USA | High | USD strengthens |
| India | Stable | INR weakens comparatively |
High US rates = Money flows away from India.
India’s Rising Trade Deficit
India imports more than it exports.
| Year | Exports | Imports | Trade Deficit |
|---|---|---|---|
| 2023 | High | Higher | Large deficit |
| 2024 | Lower | High | Very large |
| 2025 | Slow | Very High | Record deficit |
More deficit → More dollars needed → Weak rupee.
RBI’s Limited Intervention
RBI did not aggressively defend INR this time because:
- Forex reserves needed preservation
- Controlled depreciation helps exports
- Global pressure too strong
RBI allowed a gradual fall instead of burning reserves.
Global Slowdown Hurting Indian Exports
Major export sectors saw slower demand:
- IT
- Pharma
- Garments
- Engineering goods
Lower dollar inflow = INR weakness.
Gold Import Surge
Gold prices are at record highs.
India = world’s largest gold consumer.
More gold buying → More USD usage → INR falls.
Global Economic Pressures on INR
| Global Factor | Effect |
|---|---|
| High inflation worldwide | Central banks raise rates |
| China slowdown | Shifts investment to USD |
| Recession fears | Investors prefer USD |
| War threats | Safe-haven demand rises |
All roads lead to a stronger USD, not necessarily a weak INR.
Domestic Indian Factors
| Domestic Issue | Impact on INR |
|---|---|
| High inflation | Rupee value erodes |
| Slowing industrial output | Low export earnings |
| High government borrowing | Investors cautious |
| High import dependency | More USD required |
Oil Prices: India’s Chronic Weakness
India spends billions on oil imports every month.
Oil ↑ → Inflation ↑ → INR ↓
Unlike oil producers, India suffers instantly when prices rise.
Why USD Is Extremely Strong in 2025
USD is strong because:
- US economy resilient
- Interest rates high
- Safe-haven demand
- Strong US job numbers
- Global uncertainty
A powerful USD pushes almost all Asian currencies down, not just INR.
RBI’s Strategy — Why It Didn’t Fight the Fall
RBI followed a controlled approach:
- Intervene only during panic
- Avoid steep forex reserve loss
- Support exporters
- Maintain currency competitiveness
A mild depreciation is healthier than burning billions to defend INR artificially.
How INR Fall Affects India and You
📌 Economic Impact
| Sector | Impact |
|---|---|
| Imports | More expensive |
| Inflation | Rises |
| Stock Market | Volatile |
| Travel/Studies Abroad | Costlier |
| Exports | Benefit |
| IT Companies | Higher earnings in INR |
Global Currency Comparison Table
INR is not the only currency falling.
| Country | Currency | 2025 Performance |
|---|---|---|
| Japan | Yen | Weakest in Asia |
| South Korea | Won | Weak |
| Europe | Euro | Down vs USD |
| Turkey | Lira | Very weak |
| India | INR | Moderate fall |
Most currencies are weaker because USD is unusually strong.
Will INR Fall More? (Forecast)
Analysts predict:
- INR range: ₹90–₹94 in near term
- Stabilization possible if:
- Oil prices fall
- US cuts interest rates
- FIIs return to India
Long-term depreciation will be gradual, not a crash.
Conclusion
The rupee crossing ₹90 does not signal an economic collapse.
It reflects:
- Strong US dollar
- High oil prices
- Global tensions
- FII outflows
- Trade deficits
- RBI’s controlled depreciation strategy
India’s fundamentals remain strong, but global pressure is overpowering in the short term.
Q&A — Frequently Asked Questions
Q1: Why did INR cross ₹90?
Because of:
- Strong USD
- High oil prices
- FII outflows
- Global war tensions
- High US interest rates
Q2: Is INR fall a sign of economic crisis?
No.
This fall is due to global dollar strength, not India collapsing.
Q3: Will INR go back to ₹80–₹85?
Not likely soon. Possible only if:
- Oil drops significantly
- Fed cuts rates
- Global stability improves
Q4: Who benefits from weak INR?
- Exporters
- IT companies
- NRIs sending money
Q5: Who suffers the most?
- Students abroad
- Overseas travelers
- Importers
- Electronic buyers
Q6: What can India do to strengthen INR?
- Reduce imports
- Increase exports
- Promote manufacturing
- Boost foreign investment
- Develop renewable energy to reduce oil dependency
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