The Indian rupee closed at an all-time low on Tuesday, depreciating by approximately 45 paise to 88.7550 per US dollar, compared to the previous close of 88.3075. This decline is attributed to ongoing steep tariffs on Indian goods entering the United States and an increase in fees for H-1B visa applicants.
Forex dealers report that the central bank intervened at the 88.50 mark to facilitate a gradual depreciation. The rupee’s previous record low was 88.4450 per dollar, observed about two weeks ago. Dipti Chitale, CEO of Mecklai Financial Services, noted that the rupee fell to 88.8075, marking a 0.54 percent drop from the prior day’s closing rate.
“This move diverges from the broader dollar trend against other major and emerging market currencies, primarily driven by rising foreign institutional investor (FII) outflows, month-end dollar demand, and increasing tariffs on Indian exports. Additionally, the new $100,000 H-1B visa fee poses a risk to the IT sector and remittance flows,” stated Chitale.
Chitale highlighted that the US Dollar Index, currently at 97.35, has decreased by 0.61 percent over the past month as markets anticipate Federal Reserve interest rate cuts amid softer US economic growth. While the dollar has weakened against the euro and pound, it has gained against the Indian rupee.
Looking forward, Chitale anticipates the rupee will continue to exhibit a weaker bias. In the absence of supportive global capital flows, it is likely to remain under pressure, although Reserve Bank of India (RBI) interventions could provide temporary stability.
Additionally, IFA Global warned that proposed increases in US H-1B visa fees threaten India’s IT export margins and remittance flows, while American tariffs on Indian goods continue to impact trade sentiment.
The proposed HIRE Act in the US would impose a 25 percent tax on outsourcing payments and eliminate their tax-deductibility. According to IFA Global, since more than half of India’s IT revenue is derived from US clients, this legislation, if enacted as proposed, could erode competitive pricing, reduce margins, and necessitate renegotiations or delays in outsourcing contracts.
Bank of Baroda Chief Economist Madan Sabnavis emphasized that the rupee’s current low occurs amidst a weakening dollar. He identified key factors for the currency’s depreciation, including ongoing tariff uncertainty, the ramifications of H-1B visa changes on the IT sector that have caused equity investors to reevaluate their positions, and limited action from the RBI.
“If the RBI refrains from intervention, it may indicate acceptance of the situation, potentially triggering further depreciation. The 89 level is likely to be tested now,” Sabnavis concluded.
Published on September 23, 2025.
