Market forces determine value of rupee, finance ministry tells Lok Sabha as INR hits record lows

The union government on Monday has given a written response in the Lok Sabha regarding the continuous depreciation of Indian rupee's value against the US dollar. In a set of questions directed towards the finance minister, parliamentarians Anand Bhadauria, VK Sreekandan and Amra Ram, sought responses from the union government over the Indian rupee's weak performance.

"The exchange rate of Indian Rupee (INR) vis-à-vis USD closed at ₹89.41/USD on 21 November, 2025. It was at the level of ₹89.64/USD on 1 December, 2025. Further, INR reached ₹90.42/USD on 4 December, 2025," Pankaj Chaudhary, minister of state for finance (MoS finance), said in the parliament on December 15, 2025.

It's important to note that, on December 16, 2025, the value of Indian rupee has slipped to a fresh record low of 91.07 against the US dollar at the time of publication.

According to the MoS finance, various domestic and global factors influence the exchange rate of the Indian rupee, such as the movement of the dollar index, trend in capital flows, level of interest rates, movement in crude prices, current account deficit among others. He said that during the current financial year, the fall of Indian rupee has been influenced by the increase in trade deficit and prospects arising from the ongoing developments in India’s trade agreement with the US, amid relatively weak support from the capital account.

"The value of the INR is market-determined, with no target or specific level or band. The Reserve Bank of India (RBI) regularly monitors the foreign exchange market and intervenes in situations of excess volatility," the MoS finance said.

"Further, the RBI monitors key developments across the globe which may have an impact on the USD-Rupee exchange rate. Among others, it includes monetary policy actions of the major central banks, major economic data releases across the globe and their impacts thereof, OPEC+ meeting decisions, tracking, and analysing geo-political events, daily movements in G-10 and EME currencies," he added.

• The MoS finance also listed some of the measures taken by the central bank to enhance foreign exchange inflows:

• Relaxation in repayment of export credit was provided to exporters in November 2025 whereby the maximum credit period was enhanced from one year to 450 days for pre-shipment and post shipment export credit disbursed till March 31, 2026.

• In October 2025, the time period for forex outlay was increased from four months to six months in case of merchanting trade transactions. Separately, authorised dealer banks were allowed to lend in Indian rupees to a person resident outside India in Bhutan, Nepal or Sri Lanka, including a bank in these jurisdictions for cross border trade transactions.

• In August 2025, persons resident outside India that maintain a special rupee vostro account for international trade settlement in Indian rupee were permitted to invest their rupee surplus balance in the aforesaid accounts in central government securities (including T-Bills)

• In May 2025, the requirement on foreign portfolio investors’ (FPIs) to comply with the short-term investment limit and concentration limit for their investments in corporate debt securities, was withdrawn.

In response to a question on a comparison between the exchange rate of Indian rupee and US dollar in 2014, and the present, the MoS Finance said that the INR exchange rate was ₹63.04/USD as on December 31, 2014, and it rose to ₹89.99/USD as on December 5, 2025. This essentially means that the value of the rupee has depreciated 42.75% against the US dollar in the last decade.

Further the MoS Finance also said that the depreciation of the currency can increase export competitiveness while posing upward pressure on the prices of imported goods. "However, the overall impact of exchange rate depreciation depends on the extent of the pass-through of international commodity prices to the domestic market," he added.