The Indian rupee once again registered a big fall on Thursday and reached a record low of 90.4675 per dollar. This level also crossed the previous historical record of 90.42 made on December 4. To handle the continuously falling rupee, the Reserve Bank of India (RBI) intervened in the market so that the currency does not weaken further.
Rupee will fall so much in 2025
2025 has proved to be very difficult for Rs. The rupee has fallen more than 5% so far this year, making it the third weakest performer among the world’s 31 major currencies. Only Türkiye’s Lira and Argentina’s Peso are in worse condition than this. The special thing is that this decline is happening when the dollar index has weakened by more than 7% at the global level.
Why did the rupee weaken?
There are many reasons responsible for the fall of rupee. India’s increasing trade deficit, 50% tariff imposed by the US on goods exported from India, and foreign investors withdrawing money from India have increased the pressure on the rupee. Apart from this, there is uncertainty in the market due to stalled talks on trade deal with Donald Trump administration in America. Further pressure on the currency has increased after the rupee crossed the psychological level of 90. The current exchange rate has depreciated the rupee by 50% of its 2011 value.
RBI took these steps
This scenario has created problems for RBI Governor Sajay Malhotra and other officials of the central bank. They have to strike a balance between keeping the rupee flexible and maintaining market stability, so that any kind of financial instability does not arise again.
Capital controls are still in place in India, due to which the rupee is not fully convertible. Rupee trading in the international market mostly takes place in the NDF (Non-Deliverable Forward) market, where deals are settled in dollars. RBI intervenes in foreign markets through Bank for International Settlements (BIS) in collaboration with major banks of Singapore, Dubai and London.
