The Indian Rupee has been falling to new lows in what can be seen as the one of the worst weeks the currency has had against the US Dollar. However, its weakness is not constrained to just the US greenback.
The local legal tender has fallen sharply against the Pakistani rupee and the Bangladeshi Taka year-on-year. In may 2025, 1 Indian rupee was equal to 3.2913 Pakistani rupees, but it fell nearly 12% to 2.9010 Pakistani rupees by May 2026, the currency has registered a plunge of 6.8% in 2026 alone.
Similarly, Bangladesh's Taka has gained against the rupee after the currency slipped nearly 10% year-on-year from 1.42 Bangladeshi taka per rupee to nearly 1.28 taka per rupee.
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The historic decline has been triggered by a combination of elevated crude, firm US yields and persistent dollar demand. Rupee's rout reached an all-time low of 96.96 per dollar on Wednesday after opening at 96.85 levels. It settled at record closing low of 96.83 against the Greenback. Reports indicated that the Reserve Bank of India's intervention provided some respite.
However, analysts have time and again pointed out that RBI's intervention can smooth volatility, but it cannot fully offset expensive oil, a strong dollar and weak capital flows at the same time.
Harshal Dasani Business Head, INVAsset PMS highlighted that after today's slump, the currency pressure has moved from a headline risk to a balance-sheet variable.
He added that the pressure might first be experienced by import-heavy sectors and, while exporters may get translation support, that benefit will not be uniform if global demand remains soft.
Why The Fall Matters?
A falling rupee's impact extends beyond just the currency markets as it makes foreign education, foreign travel, imported goods and international business expenses costlier for Indians.
Economists also warn that prolonged currency weakness can widen India's balance of payments deficit if import costs continue to climb faster than exports and capital inflows. Considering the speed of its crippling decline, the day may not be far when the Indian currency dives to 100/dollar.
"Global problems are adding to the rupee worry more than ever. Supply chains are broken and energy prices are going through the roof. The kind of dent our crude import bill is giving us, the cycle may not break that quickly. At this pace, rupee 100 to the dollar by end of 2026 will not be a surprise anymore," said Tushar Badjate, Director of Badjate Stock shares Pvt Ltd.
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