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Rupee slips to around ₹88.7 per US dollar
The Indian rupee weakened about 3.4% in 2025, trading near ₹88.7 per US dollar. The move marks a notable decline for the currency and reflects broad pressures in currency markets this year.
Why the rupee is under pressure
- Stronger dollar: A firmer US dollar makes many emerging-market currencies, including the rupee, more vulnerable.
- Interest rate gaps: Differences between overseas and domestic interest rates can shift capital flows toward higher-yielding assets, weighing on the rupee.
- Trade and commodity costs: Higher import bills, especially for oil and other commodities, increase demand for dollars and widen the trade gap.
- Portfolio flows: Outflows from equity and debt markets put additional downward pressure on the currency.
Immediate effects on businesses and households
- Importers: Face higher input costs, which may squeeze margins or raise prices for consumers.
- Inflation: A weaker rupee can add upward pressure to inflation by making imported goods and fuel more expensive.
- Corporate earnings: Firms with large dollar-denominated expenses may see margins hit, while exporters could get a price advantage abroad.
What to watch next
- Central bank statements and any market intervention to support the currency.
- Global cues, particularly US monetary policy and dollar strength.
- Moving patterns in foreign portfolio investment flows and crude oil prices.
For businesses and consumers, the near-term outlook will depend on global financial conditions and domestic policy responses. A mix of prudent hedging, careful cost management and close monitoring of macro signals will be key as markets adjust to this weaker rupee.