The rupee slid to an all-time low of 90.42 on Thursday, extending an eight-month decline that has made it Asia’s worst-performing currency. The move highlights growing pressure on the currency and raises fresh questions about policy responses and economic fallout.
What happened
Trading pressures pushed the rupee past the previous record, reflecting sustained weakness over the past eight months. Market participants point to a combination of external and domestic factors that have gradually eroded investor confidence and kept the currency under strain.
Key drivers
- Strength in the US dollar and global safe-haven flows.
- Interest rate differentials that favour advanced-economy assets.
- Higher import bills, especially for energy, which widen the current account deficit.
- Capital outflows and cautious foreign investment sentiment.
Economic and consumer impact
A weaker rupee affects both businesses and households. Import-dependent companies face higher input costs, which can squeeze margins or be passed on to consumers through higher prices. For households, the rupee slide can lift inflationary pressures, particularly for fuel and imported goods, and increase the cost of foreign travel and education.
Policy options and market watch
Authorities typically have tools to ease currency stress: foreign exchange market interventions, changes in interest-rate guidance, or measures to attract capital inflows. Market participants will be watching:
- Any direct interventions in the forex market or official statements from monetary authorities.
- Moves in domestic bond yields and how they compare with global peers.
- Data on foreign exchange reserves and capital flows.
- Crude oil prices and global risk sentiment, both of which can quickly alter the rupee’s outlook.
What businesses and consumers should consider
- Importers may hedge currency exposure to limit cost volatility.
- Exporters could benefit from a weaker rupee but should monitor demand conditions abroad.
- Consumers should expect possible inflationary effects and plan major foreign-currency expenses accordingly.
The rupee’s slide to 90.42 is a clear reminder of how global shifts and domestic vulnerabilities can combine to move currencies. The coming weeks will show whether the trend reverses or policymakers take steps to stabilise the market.