The rupee (INR) crossed the psychological threshold of 90 against the US dollar (USD) for the first time ever on Wednesday morning, marking a historic low.
On December 3, 2025, the rupee touched an intraday low of 90.13 before settling near the 90 mark. This depreciation was largely driven by persistent outflows of foreign portfolio investments (FPI) and uncertainties surrounding India-US trade relations.
But what does this mean? What are the implications for the Indian economy and the common citizen?
Rising inflation and cost of living
The most immediate impact of a weaker rupee is "imported inflation." India imports over 85 per cent of its crude oil requirement. When the rupee weakens, every dollar of oil imported costs more rupees.
This directly increases fuel prices, which then rolls over into higher transportation costs for vegetables, fruits, and everyday goods. RBI's wider estimates state that a 5 per cent depreciation in the rupee can push inflation up by 30–35 basis points.
Impact on education and travel
For Indian families with children studying abroad, this is a direct financial hit. Tuition fees and living expenses denominated in dollars will now require more rupees.
For example, a semester fee of $20,000 that costs roughly Rs 16.5 lakh at Rs 83 per dollar will now cost Rs 18 lakh at Rs 90 per dollar, an increase of ₹1.5 lakhs per semester. International travel also becomes significantly more expensive, given the forex needs.
Export dilemma
Theoretically, a weaker currency benefits exporters (like IT and Textiles) because their earnings in dollars translate to more rupees. Former NITI Aayog Vice Chairman Rajiv Kumar argued that this depreciation could encourage labour-intensive exports and job creation.
Nothing to worry about Rupee depreciating against major world currencies. In fact it good for the economy as it encourages labour intensive exports from India, increases foreign exchange earnings and generates more jobs. High time that a so called ‘strong Rupee’ is seen as the… https://t.co/FJk96VOt91
— Rajiv Kumar (@RajivKumar1) December 2, 2025
However, recent studies caution that this benefit isn't automatic. Since India also imports many raw materials (like electronic components and gems), the higher cost of these inputs can offset the gains from exports. And global demand slowdowns can dampen export volumes regardless of currency competitiveness.
Fiscal deficit and corporate debt
A weaker rupee widens the Current Account Deficit (CAD) because the import bill (for oil, gold, electronics) simply increases in rupee terms.
Indian companies that have borrowed money in dollars will now face increased debt servicing costs. They will need to shell out more rupees to repay the same dollar amount, potentially straining their balance sheets and reducing profitability.
