Rupee vs Dollar: The recent fall in the Indian rupee has once again intensified the debate regarding the economy and financial markets. For the first time, the rupee crossing the level of 91 against the US dollar is a big psychological signal in itself, which has increased the concerns of common investors as well as policy makers. This decline has come at a time when the Indian stock market is also under continuous pressure and selling by foreign investors has weakened the market sentiment.
Despite periodic interventions by the Reserve Bank of India (RBI) to manage the rupee, steps in the foreign exchange market and a repo rate cut of 25 basis points in December 2025, the domestic currency remains under pressure. However, economists and market experts believe that instead of seeing this decline as a matter of panic, it should be understood as a natural and gradual adjustment.
Why is the rupee falling?
According to Neelkanth Mishra, Chief Economist of Axis Bank and part-time member of the Prime Minister’s Economic Advisory Council, further weakness in the rupee may be seen in the coming times, but this is not a sign of any major crisis. He says that instead of trying to save any fixed level, RBI should allow the market to balance naturally.
According to Neelkanth Mishra, India has strong foreign exchange reserves of about 685–690 billion dollars, which is enough to protect the country from external shocks. He also said that earlier efforts to stop the rupee at 83 against the dollar and excessive interference in the ‘forward market’ are now becoming a problem, the effect of which is visible in the current fall.
Indian currency will fall further
Experts believe that there are many global and domestic reasons behind the weakening of the rupee. On one hand, strong dollar in America, high interest rates and trend of global investors towards safe assets, on the other hand, withdrawal of foreign institutional investors (FIIs) from the Indian market has also increased the pressure. Moreover, speculative activities and global uncertainties have further increased the volatility in the currency market. Mishra estimates that the rupee may go to the range of Rs 92 to Rs 94 per dollar by June 2027, but this should not be seen as India’s economic weakness.
Why challenge for the rupee?
He also clarified that fundamentally there is no serious challenge to the Indian economy and the rupee. Investment commitments in India from global companies like Amazon and Microsoft, manageable balance of payments and strong domestic demand are indications that the country’s economic fundamentals remain strong.
Regarding the US-India trade deal, Neelkanth Mishra also believes that India should not give any concessions in a hurry, especially when the US Supreme Court is going to decide on tariff related matters. Overall, in the opinion of experts, the current fall of the rupee is a matter of concern, but it is not a sign of any major economic crisis, but is part of a normal and controlled process going on amid global conditions and policy decisions.
