The Indian rupee slid to an all-time low of 96.9 against the US dollar on Wednesday, capping an eight-day losing streak that has rattled markets. The currency has shed roughly 6% since late February, when it traded near 87 per dollar, and cumulative depreciation since 2009 now exceeds 50%.
Why the rupee keeps falling
Foreign portfolio investors have pulled more than $22 billion from Indian equities this year, adding relentless pressure on the rupee. The exodus comes as the US-Iran conflict remains in stalemate, with the Strait of Hormuz effectively closed. That has sent crude oil prices surging, inflating India’s import bill and widening the trade deficit.
To stem dollar outflows, the government has raised fuel prices and jacked up gold import duties. But those measures have done little to arrest the slide. The rupee’s decline accelerated after late February, when geopolitical tensions and global rate hikes began hitting emerging markets hard.
Modi's appeal and official measures
Prime Minister Narendra Modi urged citizens to conserve fuel and avoid non-essential foreign travel, a rare direct appeal aimed at reducing demand for dollars. The government also raised duties on gold imports, hoping to curb one of India’s biggest sources of foreign-exchange spending.
Fuel price hikes, implemented in stages, have added to household costs but officials argue they help shrink the current-account deficit. Whether these steps can stabilise the currency remains an open question.
Market outlook: 100 per dollar in sight?
Investment firms including Aberdeen Investments, MetLife, and Gamma Asset Management expect the rupee to weaken further, possibly breaching the 100-per-dollar threshold. Their forecasts reflect continued capital flight and elevated oil prices, with no resolution visible in the US-Iran standoff.
The Reserve Bank of India has not yet signalled direct intervention in the foreign-exchange market. Traders are watching for any move to slow the pace of depreciation, but so far the central bank has held its fire.
The big question now is whether the rupee can hold near current levels or if the next leg of the sell-off takes it past 100. The answer depends on oil prices, foreign-investor sentiment, and how the government juggles fiscal pressures with currency stability.
