₹90 to a Dollar — And Why It Does Not Mean India Is Failing

 

₹90 to a Dollar — And Why It Does Not Mean India Is Failing

The Indian rupee is sliding against the US dollar — even while India remains one of the world’s fastest-growing large economies. This is not an economic collapse story. It’s a currency story shaped by global capital flows, trade dynamics, and a deliberate shift in policy.

The rupee’s decline is being driven by a mix of domestic and global forces:

rising demand for dollars by importers, sustained foreign investor outflows, a widening trade deficit due to expensive oil and imports, and higher US interest rates that make dollar-based investments more attractive.

A Fall That Has Been Building for Weeks

This wasn’t a one-day event. The rupee has been weakening steadily, hitting fresh lifetime lows over several sessions. On December 3, it crossed the psychologically critical ₹90/$ level — despite RBI intervention through dollar sales and positions in forward markets.

More than the number itself, what matters now is stability.

Will this pressure fade — or deepen?

That question now defines India’s policy challenge:

How do you prevent short-term currency turbulence from becoming a long-term structural vulnerability?

What’s Behind the Slide?

1. Trade Tensions with the US

Recent negotiations failed to move the needle. Higher US tariffs — in some cases reportedly as high as 50% — have hurt sentiment and weakened capital inflows.

2. Investor Flight

Despite steady GDP growth and manageable inflation, foreign investors pulled nearly $17 billion out of Indian equities in 2025. Capital outflows increase dollar demand — and depress the rupee.

3. RBI’s Strategic Shift

The IMF recently reclassified India’s exchange rate system from “stabilized” to “crawl-like”. Translation?

The RBI is no longer fixing the rupee — it’s guiding it.

This marks a move from firefighting to resilience-building. As one leading economist noted: “The RBI may be allowing the rupee to weaken slightly to boost export competitiveness in light of US tariffs.”

Why This Drop Feels Different from Past Crises

This is not 2013. This is not panic-mode India.

India has over $690 billion in forex reserves: That gives the RBI the power to intervene strategically — not emotionally.

The dollar is not crushing all currencies right now: Unlike 2022, this time the rupee is slipping even while the dollar is stable. The pressure is India-specific.

RBI is choosing flexibility over defence: Instead of defending ₹90 at any cost, the central bank is allowing a controlled adjustment to maintain export competitiveness and preserve reserves.

Why Every Indian Household Should Care

This is no longer just a forex story. It’s a household inflation story.

The rupee’s weakness directly impacts:

Fuel & Energy

India imports ~90% of its crude oil and over 60% of its edible oils. A weaker rupee = higher fuel and food bills.

Electronics & Appliances

Laptops, phones, refrigerators and appliances are now more expensive.

Education & Travel

A $50,000 foreign degree now costs ₹45 lakh vs ₹40 lakh earlier.

A $2,000 vacation is now ₹1.8 lakh instead of ₹1.6 lakh.

Loans & EMIs

Dollar loans taken at ₹80 now cost 12–13% more to repay.

Middle-class families are cutting discretionary spending to manage EMIs.

Are There Any Winners?: Yes — but selectively.

IT & Services

Companies billing in dollars but spending in rupees benefit — although many hedge currency risk.

Pharma & Manufacturing

Exporters gain — but higher raw material costs reduce margins.

Textiles & Light Manufacturing

US tariffs wipe out currency advantage.

Remittance Recipients

India received nearly $138 billion in remittances last year — the world’s highest.

What Families & Investors Should Do Now

• Match income with loan currency (avoid dollar loans if your income is in rupees)

• Hedge tuition and overseas expenses

• Budget for ₹93–95/$ in long-term plans

• Favor export-driven investments (IT, pharma, global funds)

• Use remittance income strategically (FDs and debt funds offer strong real returns)

The Bottom Line

The rupee crossing ₹90 is not humiliation. It’s transformation.

India is allowing market forces to work — not fighting them blindly.

This shift prioritizes long-term resilience over short-term optics. But for ordinary households, the effects are immediate and real.

A weaker rupee is neither good nor bad. It redistributes who gains, who loses — and who absorbs the shock.

The real question now is simple:

Will stability return — or instability persist?

That alone will decide whether ₹90 is a pause… or the beginning of a new economic phase.