Indian Rupee Hits Near-Record Low as Foreign Outflows Surge — 29 September 2025 Update

Indian Rupee Holds Near Record Low Amid Heavy Outflows — 29 September 2025

New Delhi: On 29 September 2025, the Indian rupee closed at ₹88.76 per U.S. dollar, hovering near its all-time weakest level. The decline was driven by persistent foreign portfolio outflows, strong corporate demand for dollars, and mounting global trade concerns—factors that together signal a challenging phase for Asia’s third-largest economy.

Foreign investors have withdrawn about $2 billion from Indian equities since early September, lifting total year-to-date outflows to nearly $17 billion. Exporters and importers also increased dollar purchases to hedge future payments and secure raw materials, adding more pressure on the currency.

Recent changes in U.S. tariffs and immigration rules have dampened Indian export prospects and undermined investor confidence, further weighing on the rupee.

The Reserve Bank of India (RBI) intervened by selling dollars through state-run banks to curb excessive volatility. Analysts note that the RBI’s goal is to smooth sharp swings rather than defend any specific exchange-rate level.

A weaker rupee carries wide-ranging consequences. Inflation is likely to rise as imports—from crude oil to industrial inputs—become more expensive. The current-account deficit may widen because export gains will be outweighed by higher import costs. Companies with foreign-currency debt will face heavier repayment burdens, while stock-market volatility could unsettle both domestic and overseas investors.

Global markets are already reacting. Oil prices have edged up slightly as a weaker rupee makes India’s large crude imports costlier, while other Asian currencies face competitive pressure as capital flows toward the stronger U.S. dollar.

Economists warn that if the RBI lowers interest rates or adopts looser monetary policy, the rupee could weaken further. Still, some see room for short-term stability if Asian currencies strengthen and the dollar softens. A decline in global crude prices or a future rate cut by the U.S. Federal Reserve could also ease pressure.

The rupee’s record low is a clear warning for policymakers. India must balance global investment trends, trade policy shifts, and domestic fiscal measures to protect economic growth. Without swift, coordinated action, prolonged currency weakness could fuel higher inflation and slow the broader economy.