Mumbai: The Indian rupee traded at 88.6250 per U.S. dollar on September 25, 2025, showing a slight recovery from its recent record low of 88.7975 earlier this week. Despite this minor appreciation, the rupee has declined more than 3% in the current quarter, marking its steepest quarterly drop since the second quarter of 2022.

Analysts point to several factors influencing the currency's performance. External pressures, including new U.S. tariffs on Indian goods and a significant increase in H-1B visa fees, have dampened investor sentiment. These measures could reduce the flow of Indian IT professionals to the U.S., potentially affecting remittance inflows and foreign equity investments.

Foreign portfolio outflows have also weighed heavily on the rupee, with investors selling a net $7.4 billion of Indian shares over the quarter. This trend has been fueled by concerns over U.S. policy changes and their possible impact on India's economic stability.

On the corporate front, exporters' dollar sales have provided some support for the rupee as the quarter-end approaches. However, demand for hedging by importers has limited gains, keeping the currency within a narrow trading range. Dollar-rupee forward premiums have remained steady near multi-month highs, with the one-year implied yield at 2.36%, reflecting a balance between market expectations and interventions by the Reserve Bank of India.

Looking ahead, analysts expect continued pressure on the rupee due to persistent foreign outflows and ongoing U.S. policy concerns. While the RBI's interventions have offered temporary stability, the currency remains vulnerable to external shocks and domestic economic developments.