Rupee At 90: How India’s Currency Has Weathered 50 Years Of Global And Domestic Storms

Wednesday marked a pivotal moment for the Indian rupee as it weakened to 90 levels against the US Dollar for the first time in history.

Rupee's weakness is coming against the backdrop of India remaining one of the few countries yet to strike a trade deal with the US - something that has gravely impacted sentiment.

The rupee has fallen almost 5% so far this year, making it the worst-performing currency in Asia.

But at a time when analysts are predicting the rupee to fall further, it is perhaps important to look back on what history suggests.

Here, we will take a look at the rupee's trajectory against the US Dollar in the last 50 years - covering a period that saw the pre-liberalisation crisis, the Lehmann crisis, taper tantrums and most recently, Trump 2.0, among other notable events.

The period of 1975–1977 in India was marked by the imposition of the Emergency by Prime Minister Indira Gandhi.

This period introduced profound political risk, with authoritarian control temporarily suppressing workers' strikers and enforcing industrial discipline. It also curbed private investment.

The rupee, during this age, traded in a volatile range, which was indicative of the market's lack of confidence in the country's long-term stability of the governance framework.

This came against the backdrop of the prevailing oil crisis of 1973, which had major ramifications within major economies by 1975.

The 1980s are often characterised by economists as the lost decade of fiscal prudence, as it laid the groundwork for the cataclysm of 1991.

During this period, the Rupee underwent a strategy of creeping devaluation.

From roughly Rs 8 in 1980, the Rupee depreciated steadily to Rs 12.00 by 1985 and Rs 17.50 by 1990, meaning the rupee to dollar metric doubled in a decade.

The year 1991 is defined as the modern economic history of India. This was the year when the old order failed, with the ushering of a new-age, liberalised economy that unchained the rupee from economic control.

By June 1991, India’s Foreign Exchange Reserves had plummeted to $1.1 billion. The nation had barely enough to finance three weeks of imports. India was on the brink of a sovereign default. 

In reaction to the crisis, the new government of Prime Minister P.V. Narasimha Rao and Finance Minister Manmohan Singh, and the RBI executed a sharp correction of the currency to restore confidence and align the Rupee with market realities.

On July 1, 1991, the RBI devalued the rupee by roughly 9% against major currencies. A couple of days later, another devaluation of 11% was implemented.

This devaluation was accompanied by structural reforms to the exchange rate regime.

In 1992, LERMS ensured that a dual exchange rate system was implemented. And in 1993, the dual rates were merged. The rupee was also made fully convertible on the Current Account, meaning the exchange rate of the rupee in goods and services was determined entirely by market forces.

By 1993, the Rupee settled around Rs 31 per USD. The era of the "pegged" Rupee was over; the era of the "Market-Determined" Rupee had begun.

After incurring the initial volatility of liberalisation, the rupee managed to stabilise itself in the Rs 35 range. But that period of calm withered away by the form of July 1997 when the Thai Baht collapsed, thus triggering the Asian Financial Crisis.

The impact of the Baht collapse trickled down to currencies across the East Asia region, with most of the currencies from Indonesia, South Korea and Malaysia, losing up to 50-80% of their value due to massive capital flight.

The Indian rupee was under threat as well, depreciating from Rs 35.5 in 1997 to Rs 42.5 in 1998. But this was a fraction of the impact other Asian currencies incurred.

In an attempt to curb the impact, the RBI, under then Governor Bimal Jalan, raised interest rates and tightened liquidity to make speculating against the Rupee expensive.

This gradual depreciation strategy absorbed the shock without breaking the financial system

The period between 2003 and 2007 ranks among the most unique anomalies in the rupee’s history: a sustained period of appreciation.

This came on the back of the global economy booming, with India becoming a premier destination for IT outsourcing. At the same time, FIIs poured billions into the Indian economy.

The rupee, as a result, strengthened from Rs 48 in 2002 to Rs 39.40 by late 2007.

The collapse of Lehman Brothers in Sept 2008 was perhaps the biggest dent for the rupee as it froze global financial markets.

Institutional investors, facing liquidity crises at home in the US and Europe, pulled capital out of emerging markets in a "flight to safety."

As a result, the rupee reversed its appreciation trend violently. From Rs 39 in early 2008, it depreciated to Rs 51 by March 2009.

The Lehman crisis was shortly followed by the Eurozone sovereign debt crisis, with countries like Portugal, Greece and Spain suffering from weak financial conditions.

Risk aversion once again became the name of the game for global investors. The rupee, which had recovered to Rs 44 in 2010, slid back to Rs 53 by late 2011.

This period was indicative of the Rupee’s high correlation with global risk sentiment.

After the Eurozone crisis followed the taper tantrum, which was perhaps the most significant moment for the Indian rupee since 1991.

On May 22, 2013, US Federal Reserve Chairman Ben Bernanke testified to Congress that the Fed might soon "taper" (reduce) its Quantitative Easing bond-buying program.

This essentially meant that the era of ultra-cheap dollar liquidity was ending, with investors scrutinising India, which at the time had a high fiscal deficit and current account deficit.

As a result, the rupee crashed from Rs 53 in May to an all-time low of Rs 68.80 on August 28, 2013.

The RBI, led by new Governor Raghuram Rajan, launched a desperate defence in an attempt to stabilise the rupee. Interest rates were hiked. Import duties on gold, which were a major contributor to the deficit, were raised while rules for NRI deposits were also rationalised, among other policy decisions.

By 2014, the rupee had stabilised to Rs 62.

On Nov. 8, 2016, the Indian government announced the demonetisation of Rs 500 and Rs 1,000 notes, withdrawing 86% of the currency in circulation to curb the flow of black money.

Despite initial stability, the rupee depreciated to Rs 68.17 by the end of 2016.

This was followed by the IL&FS crisis. In Sept. 2018, Infrastructure Leasing & Financial Services (IL&FS), a behemoth Non-Banking Financial Company (NBFC), defaulted on its debt obligations.

The implications were huge as mutual funds stopped lending to NBFCs. Credit flow to the economy choked. Simultaneously, global crude oil prices surged past $80/barrel.

All of this contributed to the renewed weakness in the rupee, which touched the Rs 74 mark by October.

The onset of the Covid-19 pandemic in early 2020 triggered a global liquidity panic. As investors fled to the safety of the US Dollar, the rupee depreciated sharply from Rs 71 in January to Rs 76.90 in April 2020.

After two years of Covid, the Russia-Ukraine war prevailed, putting more pressure on global oil prices, with the rupee breaching the Rs 80 levels for the first time in July 2022, ending the year at around Rs 82.

The final phase of the rupee trajectory revolves around the changing world order in early 2025, when Donald Trump became the US President for the second time.

The Trump administration viewed trade deficits as a national security threat for the US, and in August 2025, a diplomatic crisis erupted over India’s strategic autonomy, specifically its continued purchase of Russian oil and participation in BRICS.

With tariff threats still looming and no sign of a trade deal with the US, the rupee has continued to find pressure, eventually touching the Rs 90 levels on Dec. 12, 2025.