3 Dec 2025
The Indo-US trade deal, stuck in limbo, is believed to be the primary cause for the decline.
The rupee slide had been building up for weeks, but the speed of the decline caught the Indian market off guard. The RBI is believed to have stepped in to calm the volatility.
INR has dropped 5.3% this year, its sharpest annual fall since 2022.
Major factors causing the decline are believed to be:
Weakening foreign investment portfolio flow
Indo-US trade deal not moving forward
A global shift towards the dollar.
Foreign investors have pulled out $17 billion from the Indian stock market this year, and the net FDI and overseas commercial borrowings have been weak.
The GDP is growing speedily, but so is the trade deficit. The GDP growth rate is at a six-quarter high, but the trade deficit is steeper due to 50% US import tariffs.
INR is expected to stay volatile unless foreign flows resume or global market conditions stabilise.
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