The Observation Engine

  The Indian rupee has slipped to a new record low of 88.33 against the US dollar as of September 2025, reflecting a mix of global and domestic pressures on the economy. What’s Driving the Fall? US Tariff Hike: The US recently increased tariffs on Indian goods by 25%, totaling almost 50% duties on several products. This has worsened India’s export competitiveness, especially in industries like textiles and engineering goods, and spooked foreign investors. Foreign Investment Outflows: In the last three trading days alone, foreign investors withdrew about $2.4 billion from Indian equity markets amid uncertainty, further straining demand for the rupee. Higher Import Costs: A weaker rupee makes crude oil, gold, electronics, and other major imports costlier, which can lead to higher inflation and put more pressure on India’s trade deficit. Market Speculation & Hedging: Importers and traders are holding more dollars to hedge against further falls, pushing the rupee...