Why Is Rupee Falling Against Dollar? Experts Explain

Indian Rupee vs. US Dollar Today: According to market analysts, the ongoing decline in the Indian rupee is being caused by worries about US tariffs as well as the significant pressure on the home currency from the flight of foreign capital.

Rupee vs. Dollar: The Indian rupee has dropped sharply in recent days, hitting all-time lows. In the interbank foreign currency market, the rupee dropped 35 paise to 88.20 against the US dollar on Thursday. After four days of gains, there was a notable drop. This begs the question of why the Indian currency is depreciating so precipitously and what steps market analysts believe may be taken to curb its depreciation.

The rupee is weak; why?

Market analysts really attribute the Indian rupee’s ongoing decline to worries about US tariffs and significant pressure on the domestic currency from outflows of foreign capital. The rupee’s four-day advance has ended, reflecting the weakness of regional currencies, according to Dilip Parmar, Senior Research Analyst at HDFC Securities. He claimed that the US Fed’s 0.25 percent interest rate drop caused the US dollar to spike higher. In particular, there are signs that two additional cuts may be suggested before the end of 2025. The Indian rupee gained 24 paise against the US dollar on Wednesday, reaching 87.85.

When will the rupee’s downward trend end?

Regarding the rupee’s ongoing depreciation, Anuj Chaudhary, Research Analyst (Commodities and Currency) at Mirae Asset Sharekhan, claims that the dramatic drop in value of the Indian currency was caused by the US Fed’s aggressive approach as well as the strengthening dollar. As expected, he added, the US central bank has lowered interest rates by 0.25 percent. Additionally, the Federal Reserve is anticipated to reduce rates by 0.25 percent by the end of this year, and by 0.25 percent only once in 2026.

Although the Reserve Bank of India is keeping a careful eye on the depreciation of the Indian rupee and has worked to slow it down, the government is undoubtedly concerned about its weakness as well.

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