Indian rupee hits new low

Indian rupee hits record low of 88.62 against the US dollar.

MUMBAI, Sept 23: The Indian rupee fell to an all-time low on Tuesday, sliding to 88.62 against the U.S. dollar, surpassing the previous record of 88.4550 reached two weeks earlier. The decline came as U.S. visa fee hikes intensified pressure on the currency, compounding an already challenging economic outlook.

The increase in H-1B visa fees could slow the deployment of Indian workers to U.S. clients, potentially impacting the profitability of India’s IT sector. This development may lead foreign investors to reassess their investments in Indian IT companies, resulting in reduced equity flows.

In addition, reduced deployment of Indian workers in the U.S. could lower remittances, further straining dollar inflows into India.

These factors come amid ongoing external pressures, including a 50% tariff imposed by the U.S. on Indian goods — the highest among Asian countries — which is expected to negatively affect Indian exports.

“For the rupee, the pressures have increased in terms of tariffs kicking in at 50% and the recent visa news is incrementally negative for equity flows, especially into the IT sector,” said Dhiraj Nim, FX strategist at ANZ Bank.

The Reserve Bank of India (RBI) appears prepared to allow the rupee to weaken gradually. With inflation projected at around 4–4.5% in fiscal year 2026-27, a modest depreciation is seen as manageable, Nim added.

Bankers noted that the RBI has intervened in the currency markets to support the rupee without defending a specific exchange rate level. These interventions are designed to maintain orderly depreciation and prevent market disruption.

On Tuesday, the central bank likely sold dollars through state-run banks near the 88.50 level to support the rupee before letting it weaken further.

Year-to-date, the rupee has underperformed compared to other Asian currencies, failing to benefit from a recent decline in the U.S. dollar index. Heavy U.S. tariffs on Indian exports and reduced foreign capital inflows have weighed on the currency.

Foreign investors have withdrawn more than $15 billion from Indian equities in 2025, underscoring concerns about the outlook for the rupee and the Indian economy.