Rupee crash explained: Why INR hit a record low & what happens next? Naveen Mathur weighs in
News Summary
The Indian rupee experienced a sharp decline last week, hitting a historic low of ₹89.66 per USD, marking its steepest single-day fall in three months. Naveen Mathur, Director – Commodities, Currencies & International Business at Anand Rathi Share, attributed this drop to a confluence of global uncertainties and weakening domestic indicators. Mathur identified several triggers for the sudden fall, including delays in the US-India trade deal despite positive signals, uncertainty surrounding a US government shutdown which strengthened the dollar, and weak domestic macroeconomic figures such as the Purchasing Managers' Index (PMI). India’s private sector activity reached a six-month low, with manufacturing PMI slipping to 59.9 and composite PMI dropping to 57.4, a nine-month low. Despite the rupee currently hovering near ₹89.17, Mathur believes it is unlikely to breach the psychologically significant ₹90 mark due to anticipated intervention from the Reserve Bank of India (RBI). However, he expects the currency to remain under depreciation pressure. Looking ahead, continued volatility driven by global risk sentiment, close RBI monitoring and intervention, and persistent weakness unless trade deal clarity emerges are expected.
Background
The Indian rupee's historic low against the USD in 2025 reflects both internal and external challenges confronting the Indian economy. In the global economic landscape, the US dollar typically functions as a safe-haven currency; thus, periods of US political or economic uncertainty, such as the threat of government shutdowns, tend to strengthen the dollar, putting depreciation pressure on other currencies, particularly those of emerging markets. The delayed US-India trade deal is another crucial external factor contributing to the rupee's decline. Under President Trump's
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