Rupee Crashes to Historic Low of 90.02 on Dec 2 as Trade Deficit Soars and US Tariff Pressures Mount

Mumbai: India’s currency markets witnessed a turbulent trading session on Tuesday, 2 December, as the Indian rupee plunged to a historic low of 90.02 against the US dollar, triggering concerns across financial and policy circles. The steep fall marks the sharpest single-year slide in recent times, with the rupee losing nearly 5 percent of its value in 2025, placing it among Asia’s weakest-performing currencies this year.

Economists attribute the decline to a cocktail of global uncertainties and domestic structural imbalances. The most alarming indicator has been India’s widening merchandise trade deficit, which soared to an unprecedented USD 41.68 billion in October, sharply higher than USD 32.15 billion in September. Official data shows exports contracted by almost 12 percent to USD 34.38 billion, while imports jumped 17 percent to USD 76.06 billion, fuelled largely by aggressive purchases of gold and silver ahead of the festive and wedding seasons. The expanding import bill has intensified the demand for US dollars, putting downward pressure on the rupee.

Adding to the strain is the absence of progress on a long-pending trade agreement between India and the United States, a development that industry bodies say is worsening the currency imbalance. The US continues to impose steep 50 percent tariffs on several Indian goods, a move that has slowed export shipments and battered sectors dependent on American markets. Export volumes to the US dipped by nearly 9 percent, raising concerns among manufacturers already battling rising input costs and subdued global demand.

A recent HSBC manufacturing survey confirmed that India’s industrial output slipped to a nine-month low in November, reflecting the impact of slower export orders and volatile commodity prices. Market analysts believe that even a limited trade pact with Washington could have helped stabilize export flows and eased some pressure off the rupee.