Indian Rupee Hits Record Low Amid Economic Pressures and Trade Deal Uncertainty

The Indian rupee has reached an unprecedented low of 90.2 against the US dollar, driven by rising tariffs and uncertainty surrounding trade negotiations with the US. Despite a strong economic growth rate of 8.2% in the last quarter, the currency's decline reflects broader economic challenges, including significant foreign investment withdrawals and a record trade deficit. As the Reserve Bank of India prepares to discuss interest rates, the market remains anxious about the future of the rupee and the potential for a trade deal with the US. Read on to explore the implications of these developments.

By Narendra Chaudhary Dec 3, 2025, 13:16 IST

Rupee Reaches Historic Low Against Dollar

On Wednesday, the Indian rupee plummeted to a historic low of 90.2 against the US dollar. This decline has been attributed to various factors, including increased tariffs imposed by the United States and a decrease in capital inflows.

Additionally, uncertainty surrounding the ongoing trade negotiations between India and the US has contributed to the rupee's struggles.

The previous low of 89.9 was recorded just a day earlier.

So far in 2025, the rupee has depreciated by approximately 5%, marking its steepest annual decline since 2022, making it the weakest currency in Asia this year.

Despite robust economic growth, the rupee continues to face downward pressure.

Recent data from the National Statistics Office revealed that the Indian economy expanded by 8.2% year-on-year in the July-September quarter, an increase from 7.8% in the previous quarter. This growth is notable compared to the 5.6% recorded during the same period last year.

Relations between India and the US soured in August when US President Donald Trump raised tariffs on Indian goods to 50% due to concerns over Russian oil purchases amid the ongoing conflict in Ukraine. Trump has accused India of contributing to Russia's military actions through its imports.

On November 10, Trump indicated that the US would eventually reduce tariffs on India, asserting that New Delhi had significantly cut back on its Russian oil purchases.

He also mentioned that the two nations were nearing a 'fair deal'.

However, the delay in finalizing the trade agreement has led to market uncertainty regarding future exports, as reported by a financial news outlet.

In the meantime, foreign investors have withdrawn over $16 billion from the Indian stock market this year. The merchandise trade deficit also reached a record high in October, indicating that imports have surpassed exports significantly.

The Reserve Bank of India's Monetary Policy Committee is set to convene for three days starting Wednesday to deliberate on interest rates, with an announcement expected on Friday.