Rupee drops to 92 versus the US dollar: The reasons behind India's currency's continuous decline

The rupee's decline to a record low of 92 against the US dollar on January 23 is starting to put a strain on budgets, raising the cost of everything from electronics and crude oil to international travel and education while providing some respite to exporters.Throughout the day, the local currency fell to an all-time low of 92 per dollar before slightly rising to close at 91.88 (provisional).

Weak domestic equities markets, persistent selling by foreign investors, and a risk-averse attitude in international markets were the main causes of the decline.
The rupee fell 68 paise to finish at 91.65 on January 21, marking the previous record low closing level, according to PTI.

The rupee has lost 202 paise, or more than 2%, so far this month. Due to ongoing foreign fund withdrawals and the strength of the dollar, it had dropped by over 5% in 2025.

A weaker rupee directly impacts imports, as buyers need to pay more rupees for the same quantity of goods priced in dollars. India is about 85% dependent on imported crude oil for fuels such as petrol, diesel and aviation turbine fuel. India’s import basket includes crude oil, coal, plastics, chemicals, electronic goods, vegetable oil, fertilisers, machinery, gold, pearls, precious and semi-precious stones, and iron and steel. With the rupee weakening, not only oil but also electronic items such as mobile phone components, certain cars and household appliances are likely to become more expensive. 

Overseas education and trips abroad turn costlier A depreciating rupee makes foreign education more expensive, as students have to pay more rupees for every dollar charged by overseas institutions. Similarly, foreign travel costs rise, since travellers must spend more rupees to purchase dollars for expenses abroad.

Silver lining However, for non-resident Indians (NRIs), a weaker rupee is beneficial, as remittances sent in foreign currency.

translate into higher rupee value back home. Exporters see mixed impact Exporters are likely to benefit from the rupee’s fall as they earn more rupees per dollar. However, exporters who rely heavily on imported inputs may see their gains reduced due to higher input costs. In theory, sectors with low import dependence, such as textiles, stand to gain the most, while high importdependent sectors like electronics may benefit the least. According to the latest data, India’s imports rose 8.7% to $63.55 billion in December 2025.

 The trade deficit stood at $25.04 billion, compared with $24.53 billion in November 2025 and $22 billion in December 2024. Crude oil imports, largely priced in dollars, increased by about 6% to $14.4 billion in December 2025. Silver imports surged by nearly 80% to $758 million, while gold imports declined 12% to $4.13 billion. What experts say?

 Think tank Global Trade Research Initiative (GTRI) said India needs to strike a careful balance between growth and inflation control, while rethinking its rupee management and trade strategies to achieve long-term economic stability.

 The Federation of Indian Export Organisations (FIEO) noted that while a weaker rupee improves the global price
competitiveness of Indian goods. However, sectors with high import dependence such as gems and jewellery and electronics may see the currency advantage partly offset by higher input costs.