Rupee Crashes To Record Low Even As Exports Jump, Sparking Imported Inflation Fears

The Indian rupee has breached a historic low against the US dollar, trading in the 90.8–91 range this week, making it one of Asia’s worst‑performing currencies in 2025 with a depreciation of about 5.5–6% so far this year. The slide comes even as November merchandise exports surged nearly 19% year‑on‑year to about 38 billion dollars, helped by a weaker currency and strong demand in key markets.

Record Levels And What’s Driving The Fall

In recent sessions, the rupee has traded beyond 90.5 per dollar and briefly slipped past 91 on strong dollar demand from importers and sustained foreign institutional investor (FII) outflows from Indian equities and bonds. Reuters data show the currency has lost around 6% against the greenback in 2025, even though the dollar index itself has softened, underscoring India‑specific pressures from a stalled trade deal with the United States and repatriation of foreign direct investment.

The finance ministry has told Parliament that the rupee is fully market‑determined and its recent weakness reflects global risk aversion, volatile capital flows, higher crude oil prices and a still‑elevated trade deficit, which is expected to hover near 25 billion dollars in coming months. Analysts add that uncertainty around steep US tariffs on Indian goods and the delay in concluding a bilateral trade agreement have further weighed on sentiment.

Exports Get A Boost, Trade Deficit Narrows

Despite currency stress, India’s exports posted a sharp rebound in November, jumping about 19% year‑on‑year to a six‑month high of 38.13 billion dollars, driven by engineering goods, chemicals, textiles and selected items that are exempt from new US tariffs. Exports to the US alone are estimated to have risen over 20% in value, while shipments to China, Europe and West Asia also picked up, helping narrow the monthly merchandise trade deficit to around 24 billion dollars, its lowest in five months.

Export bodies say the weaker rupee has improved price competitiveness, allowing Indian firms to win orders even in a sluggish global environment, though they caution that volatility and higher input costs could erode part of this advantage. A report cited by economists notes that currency depreciation is likely to