Rupee declines to 87.58, marking worst performance among Asian currencies in 2025

The Indian rupee reached a lifetime low of 87.5825, driven by U.S. trade tariff concerns and portfolio outflows.

The Indian rupee declined to its lifetime low on Thursday as a dip in Asian peers added to the prevailing bearish outlook on the currency a day before a crucial monetary policy decision.

A day before a significant monetary policy decision, the Indian rupee fell to its lowest level ever on Thursday as a slide in its Asian counterparts exacerbated the already pessimistic outlook on the currency (Bloomberg/Prakash Singh)

Uncertainty about U.S. trade tariffs and persistent portfolio outflows have hurt the rupee over the last two months and made it the worst performing Asian currency in 2025.

The rupee declined to a record low of 87.5825 during the session before closing at 87.5775, down 0.1% on the day and more than 2% so far this year.

Short bets on the rupee have risen to their highest since mid-July 2022 even as the bearish outlook on other regional currencies has eased, according to a Reuters poll.

Heightened dollar bids spurred by frequent maturities of positions in the non-deliverable forwards market have also hurt the rupee while interventions by the central bank, like on Thursday, have helped limit the losses.

India's central bank also likely conducted dollar-rupee buy/sell swaps on Thursday, a measure it has deployed over recent trading sessions to mitigate the liquidity impact of its spot dollar sales.

The dollar index was up 0.3% at 108 after hitting a one-week low on Wednesday as investors digested the prospect of a global trade war being averted.

MUFG Bank said that U.S. President Donald Trump's decision to delay tariffs on Canada and Mexico has "made us cautiously more optimistic that a wider global tariff war can be avoided", which dampens the risk of his policies being inflationary for the U.S. economy.