Mumbai, India – The Indian rupee slipped to a lifetime low against the U.S. dollar on Friday, pressured by a sluggish risk appetite, fading expectations of a Federal Reserve rate cut, and ongoing uncertainty surrounding the U.S.–India trade impasse.

The currency touched ₹88.83 per dollar, surpassing its previous all-time lows of ₹88.80 recorded in late September and earlier this month. On the interbank order-matching system, the rupee was last quoted at ₹89.34, reflecting sharper intraday losses.

Factors Driving the Rupee Weakness

1. U.S.-India Trade Dispute – Steep tariffs on Indian exports, implemented in late August, have heightened concerns among investors. The ongoing trade frictions have dampened foreign investor sentiment, contributing to significant capital outflows.
2. Foreign Investment Outflows – Indian equities have seen a net withdrawal of $16.5 billion so far this year, making the rupee one of the weakest-performing major Asian currencies in 2025.
3. Fed Rate Outlook – The market is recalibrating expectations after diminishing hopes of a near-term rate cut by the Federal Reserve, adding pressure on emerging market currencies including the rupee.
4. Central Bank Intervention – The Reserve Bank of India (RBI) had actively defended the ₹88.80 level in recent sessions. However, traders reported that the central bank has scaled back interventions, allowing market forces to push the currency lower.
5. Import and Export Dynamics – Hedging demand from importers and muted activity from exporters have compounded selling pressure on the rupee. A trader at a private sector bank noted, “There was a sudden spike in volumes once 88.80 broke.”

Market Implications

The rupee’s weakness may affect:

• Import costs for fuel, machinery, and other commodities.
• Corporate earnings for companies with significant foreign currency exposure.
• Investor confidence, as continued outflows put pressure on domestic markets.

Traders and analysts are closely monitoring RBI policies and U.S. monetary decisions to gauge whether the rupee will stabilize or continue its slide in the near term.

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Key Takeaways

• The Indian rupee hits a record low of ₹88.83 per USD.
• US-India trade tariffs and slowing foreign investment inflows weigh on the currency.
• Market expectations of a Federal Reserve rate cut fade.
• RBI intervention appears scaled back, allowing the rupee to fall further.
• The rupee is among Asia’s weakest major currencies in 2025.