Driving the newsOn Wednesday, the Indian rupee broke a historic barrier, falling below Rs 90 to the US dollar for the first time. Though the drop from Tuesday’s 89.94 may seem minor, the implications aren’t.This milestone isn’t just psychological-it signals a shift in how India’s economy is perceived, managed, and felt by its citizens.Why it mattersThe ripple effects stretch far beyond Dalal Street or forex traders. The rupee’s weakness is now hitting the average Indian household – from their fuel bills to EMIs, tuition fees, and travel costs.Micro meets macro: Imports = inflation: India imports 90% of its oil, and also depends on overseas suppliers for electronics, fertilizers, and edible oil. A weak rupee inflates these bills.Your next iPhone, fridge, or car? Costlier.Foreign education: Students studying abroad could be shelling out Rs 5–10 lakh more annually compared to 2023, especially those paying USD tuition and living costs.Zoom in: Why did the rupee drop?Three main reasons:Trade tensions with the US: Recent trade negotiations failed, and US tariffs on Indian exports-some rising by 50%-hit business confidence hard.Investor exodus: Despite steady inflation and GDP growth, foreign investors pulled out $17 billion from Indian equities in 2025, adding pressure on the rupee.Policy shift at the RBI: The International Monetary Fund reclassified India’s exchange rate regime from “stabilized” to “crawl-like.” This suggests the RBI is now guiding, not guarding, the rupee. The big picture: What makes this different from earlier rupee crises?The dollar isn’t the main villain: In 2022, a strong dollar weakened currencies across the globe. This time, the rupee is down even as the dollar remains steady.India’s war chest is full: The RBI has $690 billion in reserves-unlike the 2013 taper tantrum or the 2018 oil price shock. This creates strategic patience.Philosophy shift at RBI: Instead of fire-fighting, the central bank now aims for long-term resilience. Its goal is no longer to defend Rs 90 at all costs, but to allow natural depreciation based on fundamentals-like inflation differentials and trade shifts.“For now, the central bank may be letting the rupee weaken a little more to make exports more competitive in light of US tariffs,” said David Forrester of Crédit Agricole.
Dollar vs Rupee History
What they’re sayingBloomberg dubbed the rupee “Asia’s worst-performing currency this year.”“If they allow the rupee to close above 90, we could see further speculative bets and the possibility of the rupee heading to 91,”Anindya Banerjee, currency analyst at Kotak Securities, told Bloomberg. The recent slide is “hard to justify on a fundamental basis,” he added.“The weak macro picture in India makes weak currency performance inevitable, there has been a slide in so many data points recently – rising trade deficits, weakening nominal GDP growth, weak FDI and foreigner selling down domestic equities, etc,” Sat Duhra, portfolio manager at Janus Henderson Investors in Singapore, told Reuters.The RBI’s stance? Let it float-for now. With over $690 billion in reserves, India can act if needed, but the central bank prefers gradual adjustment to aggressive defense.Between the lines: Life is already getting more expensiveThe depreciation isn’t academic-it’s household.Oil & energy: India imports 90% of its crude and over 60% of its edible oils. A weaker rupee makes them costlier.Electronics & appliances: Imported items-laptops, fridges, smartphones-will now come with steeper price tags.Everyday inflation: Cooking oil, LPG, and petrol will squeeze budgets further, especially for lower- and middle-income households.Zoom in: Families, students, and borrowers are hurtingFor students abroad: Tuition at $50,000/year was Rs 40 lakh at ₹80/$, but now it’s Rs 45 lakh. That’s a ₹5 lakh hike-several months’ salary for many middle-class families.Education loans hurt more: A student repaying a dollar loan taken at Rs 80 now owes 12–13% more in rupee terms.Borrowers and consumers: A family earning Rs1.5 lakh/month may now have to dip into savings or cut essentials to meet new EMI demands of student loans. What’s next: The pressure is widespreadVacations abroad? That $2,000 family trip just went from Rs 1.6 lakh to Rs 1.8 lakh.Small businesses: Those reliant on imported components or foreign travel now face higher costs and tighter margins.Is this good for exporters?The textbook answer: Yes. The reality: It’s complicated.
- Winners: IT and business service firms paid in rupees but billing in dollars see better margins-though many hedge currency exposure, which limits gains.
- Mixed bag: Pharma exporters benefit from the exchange rate but are squeezed by global price pressures and rising import costs of raw materials.
- Losers: Textile and light manufacturing should win-but US tariffs blunt their advantage.
“If your goods hit a tariff wall of 25% or 50%, it’s less helpful,” said one trade economist.Silver lining: Remittance recipients are smilingIndia received $137–138 billion in remittances in 2024-more than double any other country.A $500 monthly remittance now brings in Rs 45,000 instead of Rs 40,000.For rural and low-income families, this extra Rs 5,000/month is real uplift-sometimes funding education, healthcare, or property investments.What Indian families should do now
- Match currency of income and loans: If you earn in rupees, avoid dollar loans.
- Hedge wisely: For tuition and foreign payments, consider forward contracts or staggered payments to limit exchange rate shocks.
- Plan with a cushion: Assume the rupee could drop further. Many consultants now suggest budgeting with Rs 93–95/$ in mind for 2026 plans.
- Leverage remittances smartly: Fixed deposits and short-term debt funds offer high real returns right now-worth exploring.
- Diversify investments: Global mutual funds or India-focused funds heavy in export sectors (like IT or pharma) may offer better protection.
The bottom line:The rupee’s fall past 90 is more than a number-it’s a marker of a new phase in India’s economic story.In letting the rupee float, policymakers are betting on long-term gains over short-term defense. But for millions of Indian families, that bet is already affecting daily life, monthly budgets, and multi-year plans.(With inputs from agencies)
