Rupee breaches 91-mark for 1st time against US dollar:Falls 36 paise in intra-day trade as FII outflows and India-US trade uncertainty continue

The rupee plunged 36 paise to breach the 91-mark against the US dollar for the first time in intra-day trade on Tuesday, weighed down by sustained FII outflows and a lack of clarity on the India-US trade deal. Earlier on Tuesday, the rupee opened 9 paise lower at 90.87, following a 25-paise decline in the previous session, PTI reported. Persistent foreign fund outflows and uncertainty surrounding the India–US trade agreement continue to weigh on the rupee. So far in 2025, the domestic currency has weakened by nearly 6%. On January 1, the rupee was trading at 85.72 per dollar, and has since depreciated to below the 91 level. Imports, Travel and Overseas Education Become Costlier A weaker rupee makes imports more expensive for India, pushing up costs for fuel, gold, and other essential commodities. It also increases the cost of overseas travel and education. For instance, when the rupee was at ₹50 per dollar, Indian students in the US needed ₹50 to get $1. At the current exchange rate of ₹91, expenses related to tuition, food, and accommodation have risen sharply. Key Reasons Behind the Rupee’s Fall RBI Intervention Limited So Far According to Jatin Trivedi, VP – Research Analyst at LKP Securities, the rupee had crossed the 90 mark mainly due to the absence of clarity on the India–US trade deal, with timelines being repeatedly delayed. Elevated global metal and gold prices have also raised India’s import bill, while high US tariffs have impacted export competitiveness. He added that RBI intervention has been relatively limited this time, accelerating the currency’s decline. With the RBI policy meeting scheduled for Friday, markets expect the central bank to take steps to stabilise the rupee, which is now technically oversold. How Currency Value Is Determined? When a currency weakens against the dollar, it is termed currency depreciation. A country’s foreign exchange reserves play a key role in determining currency strength. If India’s dollar reserves decline, the rupee weakens; if reserves increase, the rupee strengthens. Stability is maintained when foreign reserves are balanced against global trade and capital flows.