Indian rupee has been under pressure since start of 2025 due to multiple global as well as domestic, which led to sharp depreciation against major global currencies like the Euro, British Pound, and Japanese Yen compared to its performance against the US dollar.
According to Bloomberg data, the rupee has weakened by 13.6 percent against the Euro, 9.3 percent against the Pound, and 8.4 percent against the Yen. In contrast, it has declined only 2.73 percent against the US dollar year-to-date.
The uneven depreciation of the domestic currency against the major global currencies reflects a complex mix of global economic shifts, domestic policy impacts, and trends of investor sentiment. One of the primary factors that led to depreciation of rupee is sustained foreign fund outflows from Indian markets. These outflows have reduced demand for the local currency, adding downward pressure on its value, experts said.
“Foreign fund outflows have made the rupee weaker, while the major currencies have gained against the US dollar amid rebalancing flows, particularly in European countries,” said Dilip Parmar, a foreign exchange analyst at HDFC Securities.
At the same time, global capital flows have seen a notable rebalancing, particularly favouring European currencies, which led to improvement in economic outlooks in some European nations and growing of investor confidence in these markets, and boosted the value of the Euro and Pound against both the US dollar and Indian rupee.
Adding to the problem, US has imposed higher trade tariffs on Indian goods and services relative to other trading partners, that made Indian exports less competitive globally, further straining the country’s trade balance and weakening the rupee.
“High trade tariffs imposed by the United States on Indian goods and services compared to other countries have had a negative impact on the competitiveness of India’s exports and the rupee,” Parmar noted.
Additionally, global uncertainties, concerns over global economic stability, have dampened investor behaviour. Traditionally, the uncertain period leads to boosting demand for the US dollar as a safe haven. However, in a shift from past patterns, investors in 2025 have increasingly turned to gold and digital assets instead of the dollar, weakening the greenback and allowing other major currencies to gain ground. As these currencies appreciated, the rupee’s relative value fell further, experts said.
“The rupee’s value has also been affected by broader global currency movements. Amid geopolitical worries, the haven demand has shifted from the US dollar to gold and digital assets. Due to that, major currencies have gained versus the US dollar,” Parmar added.
Going forward, currency experts said that the movement of rupee will depend on how policymakers respond to these pressures, as well as on broader global economic developments, including interest rate changes, geopolitical events, and shifts in global trade dynamics.
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