Rupee’s Slide Makes It Asia’s Worst-Performing Currency: Can It Fall to ₹90?

The Indian rupee has emerged as the weakest major currency in Asia this year, and some analysts warn the slide could continue possibly pushing the rupee to ₹90 per U.S. dollar in the near term.

This week’s sharp currency movements reflect a broader trend: foreign investors have pulled back from Indian markets, rising import demand has fueled dollar purchases, and uncertainty around global economic and trade factors has eroded confidence in the rupee. As a result, the rupee’s depreciation has outpaced that of many Asian peers earning it the unwanted distinction of “Asia’s worst-performing currency.”

Analysts point out that these pressures are unlikely to abate soon. With rising trade deficits, unforeseen global risks, and tepid foreign capital inflows, the rupee’s recent slide may be just the beginning. Many now anticipate a further decline possibly toward ₹90 to the dollar.

What’s Driving the Rupee’s Weakness

Dollar Demand from Importers & Capital Outflows

Steady demand for dollars by importers has consistently weighed on the rupee. Meanwhile, foreign portfolio investors citing global uncertainty and shifting risk appetites have been exiting Indian markets, draining capital and dampening investor sentiment.

Trade Deficit & Macro-Economic Headwinds

India’s widening trade deficit, partly driven by surging imports and muted export growth, is exacerbating pressure on the rupee. Without a significant uptick in foreign investment or an improved export outlook, the external imbalance may keep the currency on the back foot.

Uncertainty Over Global Economic Outlook

Global macroeconomic jitters including concerns over U.S. monetary policy, interest rates, and shifting foreign capital flows have raised the dollar’s strength vis-à-vis emerging market currencies. The rupee has borne the brunt of these headwinds.

Implications: What a Weaker Rupee Means for India

Rising Import Costs: A weaker rupee makes imports from crude oil to raw materials more expensive, which could fuel inflation and increase the cost of living.

Pressure on Corporates: Companies with dollar-denominated debt will face higher repayment costs, and imported inputs for manufacturers could become costlier.

Wider Trade Deficit: Unless exports pick up significantly, a weak rupee could deepen India’s trade deficit, putting pressure on foreign exchange reserves.

Investor Sentiment: Persistent rupee weakness may deter foreign capital inflows, further weakening the currency in a self-reinforcing cycle.

What Could Stop the Slide?

A reversal even a modest one could hinge on a few critical developments: renewed inflows of foreign institutional investment, narrowing of India’s trade imbalance, stability in global financial markets, or a recovery in export demand. Without these, the rupee may continue its downward trajectory.

For now, the rupee sits precariously, with many analysts watching closely to see if it indeed slips to ₹90, a threshold that would mark a symbolic as well as economic low.