The rupee has finally slipped past the 90 mark against the US dollar, something the market has been nervous about for months. A mix of delays in the India-US trade talks and a noticeably quiet RBI has added to the pressure. And the moment the currency broke that level, you could see it ripple through stocks. The Sensex and Nifty both felt the heat, foreign investors pulled money out, and import costs shot higher. Exporters like IT, pharma, textiles, and gems may get a boost, but for import-heavy sectors, the pain is real. Everything, from crude oil to electronics, has just become more expensive, and that typically means inflation finds its way into the system.
Why the rupee is really falling
At the heart of it, India’s trade deficit continues to drag the currency down. We import far more than we export, especially energy, gold, and industrial goods, which keeps dollar demand high. Add the uncertainty around the India-US trade deal, where tariffs on some goods are still as steep as 50%, and the pressure grows. Markets are tired of wait-and-watch statements and want clear timelines.
Foreign investors have also been pulling money out this year, roughly 17 billion dollars from equities alone. Combine that with muted FDI and weak external borrowing, and the dollar supply thins out even more. Then there’s the global angle. Commodity prices are still elevated, and even with the dollar index below 100, the currency remains strong enough to lure money away from emerging markets.
The RBI’s lighter touch is another factor. Instead of aggressively defending the rupee, the central bank seems more focused on supporting growth, especially with inflation below target. That flexibility is good for the long term, but in the short term, it adds to the nervousness. With the rupee down about 5% this year, it’s now the weakest performer in Asia. October’s trade deficit of 40 billion dollars just underlines how large the gap still is.
Technically, crossing 90 opens the door for 91 because a lot of stop losses and speculative positions get triggered at high psychological levels.
How it’s hitting the market and the economy
Equity markets didn’t waste time reacting. Nifty slipped below 26,000, and the Sensex dropped as global funds turned cautious. Mid- and small-caps, which were already looking stretched, saw sharper selling. Some large-caps and defensives attracted dip-buying, but overall sentiment stayed weak.
Sectors dependent on imports—like aviation, autos, and pharma—face margin pressure thanks to costlier dollar loans and inputs. For consumers, this shows up as higher fuel prices, costlier gadgets, pricier groceries, and more expensive trips abroad. Overseas education becomes heavier on the wallet, too. The only group that benefits immediately is Indians earning abroad, who now get more rupees for every dollar they send home.
Exporters, on the other hand, tend to benefit when the rupee falls. Even a 1% depreciation can lift earnings by about 0.5 to 1% for export-heavy companies, thanks to better global pricing power. That helps balance sheets but doesn’t offset the broader macro impact. The current account deficit widens, forex reserves come under pressure, and the economy has to absorb a higher import bill.
What investors can do now
In an environment like this, caution and balance matter. Keeping about half of your equity exposure in strong large- and mid-cap names within the Nifty and Sensex is a safer approach. Export-oriented sectors like IT and pharma naturally benefit from a weaker rupee, so they stay attractive. Adding some gold, global ETFs, or rupee-agnostic defensives can help cushion volatility.
For traders, range-bound strategies work better than directional bets. Buying near support zones like 25,900–26,000 on the Nifty and booking profits around 26,100–26,200 makes more sense while the currency remains unstable.
A breakthrough on the India-US trade deal could flip sentiment quickly, especially for labour-intensive exports. But the impact will depend heavily on how tariffs are adjusted. Keep an eye on the RBI too, if the central bank starts selling dollars more aggressively, the rupee could stabilise around 88-89, which may calm markets.
In the long run, India’s strong growth story and manageable inflation support a recovery. For patient investors, these dips could still turn into opportunities.