LAHORE: India’s economic momentum is showing cracks as the Indian rupee slipped past 90 per US dollar last week, according to RBI data reported by Bloomberg, marking a historic low and highlighting mounting pressure on the country’s growth trajectory.
The currency has lost more than 5% in 2025, making it Asia’s worst-performing major currency, Bloomberg data shows.
Foreign investors, once a cornerstone of market momentum, have pulled nearly $17 billion from Indian equities and bonds so far this year, according to market analysts. The exodus reflects global uncertainty and domestic vulnerabilities, they say.
Indian stock markets, after record highs in 2024, have delivered only 5% returns in 2025, data from National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE) show, leaving the country among the weakest major markets worldwide.
Trade tensions with the United States, including delays in finalizing key agreements and tariffs, have clouded export prospects, analysts say.
At the same time, India’s trade deficit surged to $41.68 billion in October, government trade ministry figures show, driven by rising imports of oil, metals, and electronics. “Every additional dollar required for imports adds relentless pressure on the rupee,” said one market economist.
The impact is being felt by households. Imported essentials, from fuel and cooking gas to electronics, have become costlier, and students studying abroad face significantly higher tuition and living expenses.
Companies reliant on imported components, including electronics and automobile manufacturers, are grappling with rising input costs. While exporters and families receiving remittances benefit, economists note that the overall effect is higher prices for ordinary consumers.
In response, the Reserve Bank of India (RBI) cut interest rates by 25 basis points last Friday, according to an official statement. The move briefly stabilized the rupee and market sentiment across Asia.
HDFC Bank warned in its latest report that the currency could weaken to 92 per dollar if key trade deals are delayed. “The RBI appears willing to tolerate a weaker rupee, intervening only to curb speculative pressure,” economists said.
India now stands at a critical crossroads. The weakening currency, subdued stock market, and potential inflationary pressures underscore the challenges facing policymakers, investors, and households.
Analysts say the coming months will be pivotal in determining whether India can restore investor confidence and stabilize economic momentum, with consequences for both financial markets and daily life.
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