The Indian rupee has come under pressure during the ongoing global tariff war, but its movement has been far more orderly than in earlier bouts of severe economic stress such as the 1991 India economic crisis, the Global Financial Crisis, the twin balance sheet problem, the COVID-19 shock and the Russia-Ukraine war.
In each of those phases, the rupee had seen abrupt depreciation driven by capital outflows, collapsing risk appetite and severe stress on India’s macro fundamentals. In contrast, the current depreciation during the tariff war has been gradual, reflecting an economy that is better cushioned against global shocks.
The local currency opened at an all-time low and crossed the 90-mark against the US dollar on persistent equity outflows and uncertainty around the India-US trade deal.
According to Bloomberg data, the Indian rupee depreciated 5.06 percent between December 31, 2024, and December 3, 2025. It has become the worst-performing currency among Asian peers, after the Indonesian Rupiah, which depreciated 3.13 percent during same period. Philippine's Peso depreciated 1.81 percent, and Hong Kong Dollar depreciated 0.21 percent.
Here is how INR has performed in each crisis:
1991 India economic crisis:
The 1991 India economic crisis was triggered by a severe balance-of-payments crunch, with foreign exchange reserves falling to barely enough for two weeks of imports. Years of high fiscal deficits, rising external debt, the oil price shock following the Gulf War, the collapse of the Soviet Union (a key trading partner), and political instability pushed the country to the brink of sovereign default.
To avert the crisis, India sought emergency assistance from the International Monetary Fund and the World Bank, pledged part of its gold reserves overseas, and sharply devalued the rupee.
During this crisis, the local currency depreciated 29.74 percent in 1991, against the US dollar. In the entire financial year 1990-1991, the Indian rupee depreciated 12.35 percent.
In 1990-1991, the Indian rupee depreciated from 17 against the US dollar, to 25.79 against the greenback.
On July 1, 1991, the central bank devalued the rupee by roughly 9 percent against major currencies. After this, another devaluation of 11 percent was implemented. This devaluation was accompanied by structural reforms to the exchange rate regime.
Global Financial Crisis
During the Global Financial Crisis (2008–09), the local currency came under intense pressure as global investors rushed to dollar safety after the collapse of Lehman Brothers. The currency’s fall, was actively managed by the RBI through a combination of liquidity support and market intervention.
The currency has seen a depreciation of 21.92 percent during the Global Financial Crisis, and currency depreciated from 40.12 against the US dollar, to 50.17 percent against the greenback.
Twin balance sheet problem
The twin balance sheet problem in India has also caused rupee to depreciate but in orderly manner every year.
According to the Bloomberg data, the currency depreciated 6.27 percent in FY13, 9.37 percent in FY14, 4.17 percent in FY15, 5.66 percent in FY16, 2.15 percent in FY17, and 0.5 percent.
This depreciation has led to currency moving from 50.88 against the US dollar in FY13, to 65.18 against the greenback in FY18.
The twin balance sheet problem is a situation where both banks and corporations are financially distressed at the same time. Banks are struggling due to a large amount of non-performing assets, while corporations are overleveraged and unable to repay their debts.
Covid pandemic
During the Covid-19 pandemic in 2020, the Indian rupee came under sharp pressure as global markets went into panic mode following the outbreak of COVID-19. Foreign investors pulled out record amounts from Indian equity and debt markets, crude oil demand collapsed, and global trade froze, triggering a rush for dollar liquidity.
The rupee weakened rapidly from around 71.38 per US dollar in January 2020 to a lifetime low of about 76.9 against the greenback in April 2020.
The fall was contained by proactive action from the RBI. The central bank intervened heavily in the forex market by selling dollars from its reserves to smooth volatility, while simultaneously injecting massive liquidity through repo rate cuts, targeted long-term repo operations (TLTROs), CRR reductions, and a moratorium on loan repayments.
Russia-Ukraine war
Similar to the past crisis, the Russia-Ukraine war also seen a sharp depreciation of the currency from 74.88 against the US dollar before the start of war, to 82.95 against the greenback by mid-2023.
The most pressure has come as the onset of war led to rise in crude oil, natural gas and global commodity prices. The RBI sold dollars from its forex reserves to smooth sharp movements, tightened liquidity through variable rate reverse repos, and aligned monetary tightening with global trends through repo rate hikes to curb imported inflation.
Tariffs war
Since the US President Donald Trump imposed tariffs on Indian goods, the currency started depreciating heavily as the demand for dollar increased. Further, the pressure was increased after heavy outflows by foreign investors from Indian equity market.
As per Bloomberg data, between August 1, 2025, and December 3, 2025, the currency depreciated around 3 percent.
However, currency experts believe that the currency depreciation can reverse a trend if trade deal between India and US concludes.
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