The latest SBI Research Ecowrap report released on Thursday should not be viewed as an indication of a fundamentally weak currency as the Indian Rupee has plunged in the recent past. The report indicated that decimation of the rupee has been precipitated by external shocks, flight of foreign investors as well as the lack of intervention by the Reserve Bank of India (RBI) as opposed to inherent economic weakness.
Wednesday saw the rupee pass the psychologically important 90-per-dollar mark which was one of the quickest falls in the past years. It has declined to between Rs 85 and Rs 90 per USD within less than year a rate that is significantly faster compared to the past five-rupee movements that have historically been taking between 581 and 1,815 days. SBI observed that it is the second-fastest depreciation since the 2013 Tantrum at the Taper.
The rupee has fallen by about 5.5 percent against the USD, the highest of the major economies, since April 2, 2025, when the United States announced broad based tariff hikes across the various economies, despite the short lived appreciation driven by hope of a positive development in the trade.
Another issue that was raised by the report was that though rupee is the most depreciated currency among some of the major economies, it is not the most unpredictable. Since April, its coefficient of variation has been maintained at a comparatively stable level of 1.7% only. The high tariff slab levied on India of 50 which is heavily higher than that imposed on other economies like China (30%), Vietnam (20%), Indonesia (19 Immensely higher than Japan 15%), is one of the major reasons that have led to the current depreciation.
SBI also mentioned that the Real Effective Exchange Rate (REER) of the rupee is at its lowest point in recent years as it reached 97.40 in September 2025, the lowest point in seven years since the month of November 2018.
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