Rupee Near All-Time Low: Why It Keeps Falling

On Friday, October 10, one US dollar cost about 96.73 rupees. The rupee’s weakest level ever — 96.96 — was hit this May. That means the rupee is now just paise away from the worst fall in its history. On Saturday, the Reserve Bank of India announced emergency steps to defend it. Here is what’s happening, why, and what it means for you.

Short answer: The rupee is falling because more people want dollars than rupees. Crude oil above $100 a barrel means India’s oil companies must buy huge amounts of dollars, and foreign investors keep pulling money out of Indian shares. The RBI’s first rate hike in nearly four years barely helped.

What happened this week

The rupee opened the week on October 5 at 96.20 and closed Friday at 96.71–96.73 — a fall of about 0.54% for the week, according to market data compiled by HDFC Sky on October 10. On Thursday it touched 96.88, its weakest in five months. The all-time low of 96.96 came in May 2026. So far in 2026, the rupee has lost more than 7% against the dollar (Reuters, October 10).

Friday brought small relief: the rupee gained 16 paise as the dollar softened and crude prices eased (HDFC Sky, October 10). But the bigger picture didn’t change. Foreign investors were net sellers of Indian shares worth Rs 30,293.9 crore this week. Indian institutions bought Rs 30,312.26 crore — almost exactly balancing the foreign exit, but foreign money leaving is still the market’s biggest worry (Business Today, October 11).

Why the rupee falls — in plain words

A currency falls when more people want to sell it than buy it. Right now, demand for dollars is strong and supply is short. Two things are driving it.

Oil. India buys most of its crude oil from other countries and pays in dollars. With crude above $100 a barrel, oil companies need enormous amounts of dollars every single day. Every dollar they buy pushes the rupee down a little.

Foreign investors. Big overseas funds are selling Indian shares. When they sell, they convert rupees back into dollars and take the money home. Less foreign money, weaker rupee.

Depreciation is the formal word for this. It simply means each rupee buys fewer dollars than before.

What it means for your wallet

Petrol and diesel. Oil is bought in dollars. A weaker rupee makes every barrel costlier in rupees. That pressure can push fuel prices up — and fuel prices push up the price of almost everything else, from vegetables to transport.

Foreign travel. A holiday abroad gets costlier. Hotels, flights, and shopping priced in dollars all need more rupees.

Students abroad. Fees and living costs in dollars, pounds, or euros now need more rupees from parents back home.

Phones and laptops. Most electronics are imported and priced in dollars. They get costlier too.

Loans. The RBI raised its repo rate on October 7 — its first hike in nearly four years (HDFC Sky, October 10). When the RBI raises rates, banks can raise home and car loan rates as well.

There is one group that gains: exporters. They earn in dollars and spend in rupees, so a weak rupee means more rupees for every dollar they bring in.

The RBI’s emergency steps

On Saturday, October 10, the RBI announced a package to defend the rupee (Reuters, October 10).

The biggest step: a special dollar window for the three state-run oil companies — Indian Oil, Bharat Petroleum, and Hindustan Petroleum — starting October 12. The RBI will sell them dollars directly from its reserves, so they stop buying dollars in the open market. Oil firms are among the biggest dollar buyers in the country, so taking them out of the market should calm things down.

The RBI also tightened rules on currency speculation. Traders can no longer rebook cancelled foreign-exchange derivative contracts. The limit for rupee derivative positions without proven business need was cut from $100 million to $5 million. And banks must keep a 20% cash reserve against rupee derivative deals above $2 million (Reuters, October 10).

Dhiraj Nim, a currency strategist at ANZ Bank in Mumbai, told Reuters the steps “should help reduce volatility, but it will show up in a depletion of reserves.” India’s foreign exchange reserves have already fallen by more than $50 billion in recent weeks, to $734 billion as of October 2 (The Shillong Times, October 11).

History note: the RBI used the same oil-company dollar window back in 2013, during the “taper tantrum” currency scare. It worked then — which is probably why the central bank reached for it again.

What nobody knows

Here’s the honest part. Nobody knows where the rupee goes from here. The RBI’s steps may calm the market — or crude prices and foreign selling may overpower them again. Forecasts differ, and anyone who claims certainty is guessing.

One early sign: after the announcement, the rupee strengthened about 0.6% in the offshore forward market on Saturday, though trading was thin (Reuters, October 10). The real test comes Monday, when markets reopen.

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