On December 3 the rupee weakened past 90 per dollar for the first time. Gold imports, foreign selling and an unfinished trade deal all pushed in the same direction, and the RBI chose not to stand in the way.
On December 3, the rupee fell past 90 to the US dollar for the first time in history. Round numbers mean nothing to economics and everything to headlines. Over 2025 the currency lost roughly 5% of its value, making it the worst-performing major currency in Asia. Behind that slide is a year in which almost every force acting on the exchange rate pulled the same way.
Force one: gold
Indians bought gold heavily before the wedding and festival season, even at record prices. Gold imports in October came to about $14.7 billion, and the trade deficit widened to a record of around $41.7 billion. Every gram of imported gold is paid for in dollars, and those dollars have to be bought with rupees. A wedding necklace and a barrel of crude look identical on the country’s external accounts.
Force two: money leaving
Foreign portfolio investors sold Indian shares through most of 2025, put off by high valuations and the 50% US tariff. When they sell, they convert their rupees back into dollars, which adds to the pressure. The missing trade deal with the United States has kept many of them cautious.
A currency is a price like any other. When more people want to sell rupees than buy them, the price falls.
The RBI’s choice
The RBI holds close to $690 billion in foreign exchange reserves and could have spent some of it to defend 90. Under Governor Sanjay Malhotra it has instead allowed a more gradual decline, stepping in to smooth sharp moves rather than holding a line. The reasoning is that a slightly weaker rupee helps exporters hurt by the US tariff, and that burning reserves to defend a round number is a fight central banks tend to lose. For students heading abroad, families paying for imported goods and anyone planning a foreign trip, the practical effect is simple. Everything priced in dollars just got more expensive.
Sources: RBI reference rates; Ministry of Commerce trade data for October 2025.
- The rupee crossed 90 per dollar on December 3, about 5% weaker than at the start of 2025.
- It was the worst-performing major currency in Asia this year.
- Record gold imports widened the trade deficit to about $41.7 billion in October.
- The RBI allowed the move rather than spending heavily to defend a particular level.
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