Indian Rupee Becomes Asia's Worst Performer in 2025

The Indian rupee has come under heavy pressure and has slipped to a new all-time low against the US dollar. This sharp fall has created fresh concerns for investors, businesses and the stock market. The weakening currency is now becoming a major challenge at a time when markets were slowly showing signs of recovery.

On Tuesday, the rupee dropped to 90.82 per US dollar, marking its fourth straight day at a record low. The fall happened mainly because India has still not reached a trade agreement with the United States. High US tariffs on Indian goods have affected exports, while foreign investors continue to pull money out of Indian markets. Strong demand for dollars and steady selling by foreign institutional investors have further added pressure on the rupee.

In 2025 so far, the rupee has fallen nearly 6%, making it the worst-performing currency in Asia this year. India is also the only major economy that does not yet have a trade deal with the US, which has weakened investor confidence. As a result, global funds have withdrawn around $1.6 billion from Indian equities in December, after investing money just a few months earlier. Investors have also reduced their exposure to Indian debt.

The rupee’s fall is now affecting the stock market. The benchmark Nifty 50 index slipped from its recent highs, and overall sentiment has turned cautious. Experts say continued foreign outflows and global uncertainty are putting pressure on both the currency and equities.

However, a weak rupee is not bad for everyone. Companies that earn most of their revenue from overseas markets benefit from a cheaper rupee. Technology companies, in particular, have gained, with IT stocks rising around 14% since late September. Pharmaceutical and metal companies also see some advantage due to better export earnings.

On the other hand, sectors like banks, energy companies, and infrastructure firms suffer as costs rise and foreign borrowing becomes expensive. Analysts believe stock returns may remain limited in the near term and advise investors to focus only on select sectors.