2025 has been a rollercoaster ride for the Indian rupee, with the imposition of tariffs, RBI rate cuts, outflow of foreign equities and other economic uncertainties adding to the volatility of the currency.
So far in 2025, the currency has extended losses by nearly 5%, hitting an all-time low of 91.08 in mid-December. The currency made tremendous swings, starting near 85 in January, moving to a high of around 83–84 in May, and now ending close to 90. So what exactly drove the currency?
Let us look at a month-wise comparison for the rupee and what happened exactly
January 2025 – Rupee starts the year with a dip to 86
At the beginning of the year, the currency started at around the mid-85s and went on to breach this mark, reaching the 86 level against the US dollar. By the end of the month, it was trading above the 86 mark. The weakening occurred as US President Donald Trump announced plans to impose tariffs on several countries.
February 2025 – Trump tariffs hit, rupee slips past 87
In early February, as Trump’s tariffs translated into reality, the rupee breached past the 87 level, which was also fuelled by the outflow of foreign equities from the domestic market. While the RBI stepped in to lend support, by month-end the currency was nearing the 88 level.
March 2025 – Rupee fights back, recovers to mid-85s
By early March, the Indian currency started staging a recovery, hovering near the 86 level, as markets were optimistic that Trump’s administration would not impose tariffs on India. This, along with strong dollar sales by the RBI, fiscal year-end settlements and profit repatriation supported the rupee and pushed it back into the mid-85 range.
April 2025 – Rupee holds steady amid tariff threats
While the US president slapped tariffs on Asian nations, the Indian rupee held firm and even hit a high of 84 mark against the US dollar. During the month, the currency largely traded in the 85-range attributed to inflow of foreign equities into the domestic markets, and dollar sales by exporters.Further, Trump said that a trade deal with India was coming along well, which lent support to the currency.
May 2025 – Rupee surges to a record high near 83
The start of May proved to be hectic for the currency as it hit a record high of 83.78 against the greenback. In early May, the currency was trading near the 84 range, driven by large inflows of foreign equities into the domestic market. However, the month ended in the 85 range due to trade concerns with the US and political tensions between India and Pakistan.
June 2025 – RBI surprises markets, rupee steadies at 85
The RBI delivered a surprise 50-basis-point rate cut this month, which led markets to believe the currency would see steep declines. For most of the month, the rupee traded near the mid-85 range, supported by dollar weakness and lower oil prices. Further, the RBI’s liquidity measures to withdraw excess cash from the banking system helped the currency hold ground.
July 2025 – Tariffs and trade woes push rupee down to 87
While the currency started the month on a strong note, by mid-July it reached the 86 range, largely due to stalled trade talks with the US and the outflow of foreign equities. This was followed by Trump announcing 25% tariffs and a penalty on imports from India, adding further pressure to the currency which slipped to the 87 level.
August 2025 – Tariffs and dollar demand push rupee to 88
For most of August, the rupee hovered near the mid-87 level eventually crossing the 88 mark towards the month end. The currency slipped further due to imposition of additional 25% tariffs by the US on India’s purchase of Russian crude oil. Additionally, strong dollar demand from importers added to the weakness. The RBI stepped in to prevent sharper losses and stabilize the rupee.
September 2025 – Rupee remains near 88
With tariffs of over 50% lingering on Indian goods, the rupee remained under pressure throughout September. This, along with a sharp rise in H-1B visa fees, kept the currency in a narrow range around the 88 mark. Continuous selling of domestic equities by foreign investors and steady dollar demand also weighed on the currency.
October 2025 – RBI steps in to keep rupee from falling past 89
At the start of the month, the currency was moving in a tight range of 88, nearing the 89‑level. By mid‑October, the RBI stepped in and sold dollars aggressively, which provided some support. By month‑end, the rupee remained in the high‑88 range, due to weak foreign inflows and steady dollar demand, but the central bank’s intervention prevented it from breaching 89.
November 2025 – Rupee finally breaches 89 mark
The rupee started the month near 88 and breached 89 , largely due to a lack of progress on the India–US trade deal, outflows of foreign equities and corporate dollar demand. However, traders said that the RBI intervened at key levels to avoid sharper declines.
December 2025 – Rupee breaches 90/$ and 91/$, then rebounds to 89 per dollar
December proved to be highly volatile for the currency, as it not only breached the crucial 90 mark but also proceeded to cross the 91 mark. In early December, the currency slid past 90 and 91 due to the absence of a trade deal with the US, panic dollar buying by importers and limited early intervention by the RBI.
However, the central bank intervened heavily, sold dollars and helped break speculative positions which helped stage a recovery for the currency back towards the 89 range.
With foreign inflows returning and liquidity measures undertaken by RBI, the rupee appreciated by nearly 2% from its record low, reigniting hopes for the currency.
Conclusion
The year 2025 marked a significant slide for the Indian rupee. Currency experts have said that improved trade numbers, strong GDP growth and intervention by RBI could support a further recovery for the currency.
Policymakers have added that a trade deal with the US is likely to be finalised by March 2026, and going forward the currency is expected to trade in the 88 range for the first half of 2026.
After swinging from 85 per dollar to 91 per dollar and back below the 90 per dollar level, all eyes are now on the levels that the currency may trade in 2026. While most analysts refrained from predicting a sharp range, they believe that the US-India trade deal will be a key catalyst for the currency in the new year.