Currency Crisis Deepens
On September 23, 2025, the Indian rupee tumbled to a historic low of 88.75 against the US dollar, shedding 47 paise in a single session. This sharp depreciation, the steepest in months, stems from a cocktail of US H-1B visa fee hikes and relentless foreign institutional investor (FII) outflows, hammering the IT sector’s export engine. As traders grapple with the fallout, the Reserve Bank of India (RBI) faces mounting pressure to intervene, while economists warn of broader economic ripples in an already volatile market.
The H-1B Shockwave
The rupee’s dive coincides with a proposed $100,000 H-1B visa levy, a Trump administration push to curb outsourcing and protect American jobs. India’s $250 billion IT services industry, reliant on the US for 60% of revenues, stands to lose billions in remittances and contracts. Forex experts attribute 20% of the depreciation to this uncertainty, with firms like TCS and Infosys bracing for higher costs and delayed hires. The levy, if enacted, could slash H-1B approvals by 30%, hitting India’s talent pipeline hard.
FII Exodus Adds Fuel to the Fire
FIIs withdrew Rs 2,910 crore from equities on September 22, extending August’s Rs 46,903 crore outflow—the highest in months. This selling spree, driven by visa fears and global risk aversion, has eroded market confidence. Domestic institutional investors (DIIs) countered with Rs 28,645 crore buys, but the net drain weighs on the rupee. The dollar index, steady at 97.28, reflects safe-haven demand amid US uncertainties.
Example: IT stocks like Infosys dipped 3%, dragging the Nifty IT index down 2.5%.
Table: FII vs DII Flows (Aug-Sep 2025)
| Period | FII Outflow (Rs Cr) | DII Inflow (Rs Cr) | Net Impact |
|---|---|---|---|
| August | 46,903 | 94,829 | – (Deficit) |
| Sep 22 | 2,910 | 28,645 | – (Sell-Off) |
Broader Market and Economic Pressures
The rupee opened at 88.41 and hit an intraday low of 88.82 before settling at 88.75. Brent crude’s 0.41% rise to $66.84 adds import cost burdens, while Goyal’s US trade delegation seeks a deal. Analysts predict a range of 88.45-89.20, with RBI intervention possible if it breaches 89.00. The Sensex fell 57.87 points to 82,102.10, reflecting sentiment jitters.
What’s Next for the Rupee and Investors
With Commerce Minister Piyush Goyal leading talks in New York, a trade pact by November could stabilize flows. Exporters gain from a weaker rupee, but IT firms face headwinds. RBI’s reserves at $690.72 billion offer a buffer, but sustained outflows could test limits. Investors should eye diversification into rupee-hedged assets.
FAQs
- Why did the rupee fall? H-1B fee hikes and FII outflows amid US policy shifts.
- What’s the all-time low? 88.75 on September 23, 2025.
- Impact on IT sector? Potential $10 billion remittance hit.
- RBI’s role? Possible intervention if it hits 89.00.
- Trade deal timeline? Goyal aims for November.
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