The has been weak and volatile in recent months, hitting historic lows against the US dollar. As of November 6, 2025, the USD/INR exchange rate ranged between ₹88.61 and ₹88.80, close to its all-time low of ₹88.97 recorded in September 2025.
Over the last month, the rupee mostly fluctuated between ₹87.8 and ₹88.8 per dollar, showing slight appreciation from its lowest points but still remaining at multi-year lows.
Over the past year, the rupee has declined roughly 5% against the dollar, influenced by a global risk-off mood, ongoing dollar strength, and capital outflows from Indian stocks.
While GDP growth, inflation, and fiscal policies continue to provide support, external factors—especially US interest rate policy, oil prices, and trade tensions—have primarily influenced the rupee’s fluctuations.
The Reserve Bank of India has frequently intervened to avert the rupee from dropping below its historic low of 88.80, raising expectations that the central bank will persist in defending this crucial level in the near future, as per reports.
Why is Rupee is Falling?
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments explained that the major contributor to the rupee depreciation is the continuous dollar outflows from India triggered by the sustained FII selling in the Indian stock market.
“Rupee depreciation is restricting the full translation of the recent decline in international gold price, in India. Expectations of further weakness in INR is sentiment negative for capital inflows,” said Vijayakumar.
Similarly, Mohit Gulati, CIO and managing partner of ITI Growth Opportunities Fund, also pointed out that the decline in the rupee is mostly due to the strength of the dollar internationally clubbed with some micro quarterly weakness at home.
Gulati noted that however, because India imports almost all of its bullion, its immediate effects include a tendency for gold prices to rise while import-dependent industries experience pressure on their margins. Conversely, export-focused brands like IT and pharmaceuticals find some leeway in this setting.
How depreciating INR will impact gold prices?
A weakening rupee often prompts investors to purchase gold as a protective asset or safe haven and a hedge against currency fluctuations. Typically, a falling INR elevates domestic prices but creates a complicated and varied impact on stock markets.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities said that the recent depreciation in the rupee has played a dual role in India’s financial markets — offering strong support to gold while putting pressure on equities.
A weaker rupee directly increases the landed cost of imported gold, keeping domestic prices elevated even if international prices remain stable, according to Trivedi.
Falling INR’s impact on equity markets
Experts suggest that a declining rupee could benefit some sectors thanks to favourable export conditions, while the broader equity market might encounter challenges from inflation-driven interest rate increases and reduced foreign investments.
Consequently, a weakening INR offers both opportunities and obstacles for Indian stocks, leading to varied sector performance and adding to overall market fluctuations.
Jateen Trivedi highlighted that the persistent FII outflows triggered by rupee weakness have weighed on equity market sentiment, particularly in sectors sensitive to foreign investment.
“If the rupee slips below 89.00, amid a dollar index breakout above 100, the currency could test 90 levels, further supporting gold prices for 124,000 odd zones scale, while adding downside pressure to equities as foreign investors may continue offloading holdings,” said Trivedi.
Talking about some recovery in the Indian stock market, Dr. VK Vijayakumar explained that the situation can change when clear signs of earnings recovery in FY27 emerge, making the market valuations fair.
Outlook
Mohit Gulati, CIO and managing partner of ITI Growth Opportunities Fund, said that India continues to be seen by investors as a structural growth story with stable policies and strong earnings. Even though the rupee is struggling today, there is still a strong demand for Indian stocks; it is just waiting for the volatility in the world to subside.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.