The Indian rupee reached a record low of Rs. 88.53 per US dollar on September 23, 2025, driven by concerns over steep US tariffs on Indian goods and the introduction of a $100,000 H-1B visa fee. This decline reflects growing investor unease, compounded by weak foreign equity inflows. The currency fell from an opening rate of Rs. 88.41, marking a drop of 25 paise from the previous close of Rs. 88.28.
The rupee’s decline extends a broader trend of volatility, with Monday’s decline of 12 paise contributing to the recent downward pressure. Forex traders pointed to global markets adopting a risk-off stance, heightened uncertainty regarding trade policy, and expectations that remittances from Indian professionals in the US would diminish due to increased visa costs.
Policy Challenges and Market Reactions
The US’s recent tariff increases are exacerbating pressure on Indian exports, while a sluggish global demand further complicates the situation. The rise in H-1B visa fees is particularly concerning for India’s IT sector, which accounted for over 70% of the visas issued in 2024.
Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, commented on the Reserve Bank of India’s (RBI) limited capacity for direct currency intervention, saying, “The RBI has limited capacity for direct currency intervention, which is why the rupee continues to touch new lows against multiple currencies.” Although some inflows from domestic initial public offerings (IPOs), estimated at around Rs. 7,500 crore, provided brief relief, they were quickly outweighed by strong dollar demand.
On the international front, the US dollar index saw a slight decrease of 0.03%, reaching 97.30. Meanwhile, Brent crude prices dipped 0.62% to $66.16 per barrel, offering marginal relief for India’s import costs but failing to alleviate broader concerns.
Impact on Equity Markets and Future Outlook
The rupee’s weakness has had a ripple effect on the equity markets. The Sensex fell by 265.34 points (0.32%) to close at 81,915.17, while the Nifty dropped 80.12 points (0.30%) to settle at 25,119.25. Foreign Institutional Investors (FIIs) maintained their selling trend, offloading shares worth Rs. 2,910 crore on Monday, reflecting ongoing apprehension regarding market stability.
The sustained depreciation of the rupee has led to speculation that the RBI might consider a 25-basis-point rate cut in its upcoming policy meeting. Economists at the State Bank of India (SBI) noted that with inflation hovering around 4%, reducing rates could be a necessary measure to bolster growth and stabilize the markets.
In an effort to address these challenges, Commerce Minister Piyush Goyal is currently leading a delegation in the US for trade negotiations. These discussions are expected to focus on tariff escalations and visa regulations, and investors are keenly awaiting any signs of progress that could relieve the mounting pressure on the rupee.
