Rupee Breaches 90 Against the Dollar: What’s Really Happening and What Businesses Should Prepare For
The Indian rupee crossing the mark of 90 against the US dollar has shaken financial markets, corporate sectors, and everyday consumers. Of course, currencies move up and down every day, but the crossing of 90 is not just another headline; it signals deeper pressure on the Indian economy caused by global uncertainties, foreign investor behaviour, and delayed trade agreements. What’s more important is understanding why this is happening, how long the weakness may last, and what businesses should do next.
For the last couple of weeks, foreign exchange traders have warned on many occasions that the rupee is under stress. Now, many factors are coming together at the same time to form the perfect storm. Negotiations between both countries have tapered off, and the lack of clarity makes global investors nervous. When investors sense instability, they move to “safer” currencies like the US dollar. Because this happens so quickly, money demand goes up and moves the rupee downwards.
Another big reason is the outflows on account of FPI. The FPIs are large global investors who invest money into Indian stocks and bonds. They have been pulling out funds steadily. When FPIs exit, they convert Indian rupees back into dollars, creating extra demand for the US dollar in the market. That demand pushes the rupee even lower.
While the RBI has been intervening occasionally to curb undue volatility, market participants believe that the RBI's intervention is limited. The central bank cannot afford to burn large chunks of its foreign reserves to defend a particular exchange rate. This is likely to mean continued fluctuations in the rupee until things start stabilising globally.
What Does This Mean for India and Businesses?
First, a weaker rupee makes imports more expensive. India is dependent on imported crude oil, machinery, electronic components, and chemicals. When the rupee weakens, all these become costlier. Naturally, this pushes up inflation and raises manufacturing costs. Businesses dependent upon imported materials—electronics companies, automobile manufacturers, and buyers of pharma raw materials—will see profit margins shrink unless prices are raised.
On the other side, there lies a silver lining. A weak rupee can make Indian exports competitive. Textile companies, IT firms, agricultural exporters, and small manufacturers benefit when their products become cheap for foreign buyers. But this only works if global demand stays strong—and that is uncertain for now.
This situation also impacts travellers, students abroad, and families sending money internationally. As the rupee declines, the expenses related to overseas education, travel, and remittances go up. Households will directly feel this pinch.
How Long Could This Weakness Continue?
Economists said sentiment will remain fragile unless the US–India trade deal shows some visible progress. Any positive development between the two countries could stabilise the rupee or even help it recover. However, global uncertainties—like rising US interest rates and geopolitical shifts—may keep the dollar strong for some time.
What Should Businesses Do Now?
Companies reliant on imported goods need to reassess their cost structure. Some may look at hedging tools that shield them from currency volatility. Others may consider sourcing alternatives from domestic suppliers to reduce exposure to the dollar.
Exporters, however, should take advantage of the situation. A favourable exchange rate may open new international markets or make existing clients more profitable. IT and service companies often benefit the most, as their earnings are usually dollar-denominated.
Investors too need to reconsider their strategies. Volatile currency normally affects the stock market, particularly sectors such as oil & gas, aviation, paints, and automobiles—industries that depend on imported raw materials. Sectors like IT, pharma, and export-oriented manufacturing may perform better.
Consumers should be prepared for short-term price increases in essentials, electronics, and imported products. Inflation pressures may rise if the rupee stays near or above the 90 level for long. At psychological barriers like 90 per dollar, the currency drop often pushes policymakers to take remedial action.
India might become more proactive in securing trade stability, foreign investment, and stronger economic policies. The RBI may intervene when volatility is too sharp. And global investors will closely watch how India manages this phase.
The fall of the rupee is a warning sign, no doubt, but it’s also something the country has dealt with before. Whether this is temporary or part of a longer trend will become clear in the coming weeks. For now, the best strategy remains: stay informed, stay prepared, and watch key global and domestic developments.
