The Indian rupee just hit a lifetime low against the US dollar on Tuesday’s opening bell, falling to 85.87. The INR is reeling under tremendous pressure as data points towards the US economy being resilient. The development reinforces bets that the Federal Reserve might not rush to cut policy rates in 2025.

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The DXY index, which tracks the performance of the US dollar shows the currency hitting 108.80. The USD has been strong since the beginning of 2025. It has outperformed other currencies in the forex markets. The rupee is walking on a tightrope, and currency analysts expect it to dip to another low of 86 this month.

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Asian currencies like the Chinese yuan, Japanese yen, and the Indonesian rupiah have fallen by around 0.4% in January. Even leading currencies like the Euro and Sterling Pound are facing a litmus test against a stronger US dollar. The Indian rupee is the hardest hit among the lot as it has been falling to new depths in the charts.

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Indian Rupee Vs the US Dollar

The Indian stock market is facing an exodus of foreign institutional investors (FII) from October 2024. The sell-offs intensified after Trump reclaimed the White House, making FIIs park funds in the American markets. Sensex dipped to the 77,500 level on Tuesday while the Nifty plummeted to the 23,400 range. Around $12 billion worth of equity funds have exited the Indian markets in the last three months alone. This is adding immense strain on the Indian rupee as the US dollar is solidifying in the indices.

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It is highly unlikely that the Indian rupee could reverse course from here and come out on top. The US dollar would be a force to reckon with in 2025 as Trump’s tariff threats could push other countries to follow suit. The consequences of sidelining the US dollar for trade will be a 100% tariff increase on goods entering America.