Rupee Hits Record Low at 85/USD as Fed Outlook and Economic Pressures Weigh

The Indian rupee has plunged past the 85 mark against the U.S. dollar for the first time, marking a historic low. The decline follows the U.S. Federal Reserve’s hawkish outlook, signaling fewer rate cuts in 2025 than previously anticipated. The rupee’s rapid depreciation from 84 to 85 occurred within two months, far outpacing prior declines, and highlights growing challenges for India’s currency amid weak capital inflows and mounting economic pressures.

Emerging Asian currencies, including the Korean won, Malaysian ringgit, and Indonesian rupiah, also faced significant losses, reflecting broader regional concerns triggered by the Fed’s policy shift. The Reserve Bank of India intervened to stabilize the rupee, joining other central banks in the region that pledged to curb excessive volatility. Meanwhile, U.S. equity markets saw their steepest drop in months, amplifying fears of prolonged global market instability.

India’s economic challenges compound the rupee’s struggles. The country’s GDP growth has slowed to a seven-quarter low, the trade deficit is expanding, and persistent U.S. dollar strength further erodes investor confidence. Analysts warn that the Fed’s tighter stance could exacerbate emerging market vulnerabilities, requiring coordinated efforts to navigate the growing financial turbulence.