Rupee plunges 5% in 2025 on persistent FII outflows

Mumbai: The rupee slumped 5 per cent in 2025 as persistent capital outflows from foreign investors, alongside heightened dollar demand from importers, making it one of the worst-performing Asian currencies.

On the last trading session of 2025, the rupee depreciated 13 paise to close at 89.88 (provisional) against the US dollar as month-end demand and FPIs’ dollar buying kept it lower.

The domestic currency has exhibited a negative bias throughout the year, making it Asia’s worst-performing currency in 2025, with foreign portfolio investors pulling out USD 16.5 billion from equities this year, further denting investor sentiments, forex traders said. At the interbank foreign exchange, the local unit opened at 89.89 against the dollar and touched an intra-day low of 89.95 and a high of 89.84 against the American currency.

At the end of Wednesday’s trading session, the rupee was quoted at 89.88 (provisional) against the greenback, registering a fall of 13 paise over its previous close. On Tuesday, the rupee rose 23 paise to close at 89.75 against the greenback. On a year-on-year basis, the rupee has plunged 4.95 per cent.

It was quoted at 85.64 on December 31, 2024. “Since the Trump Administration took over, the rupee has been the worst performing currency in the Asian Region, depreciating by more than 5 per cent during 2025, marking its highest depreciation in the last three years,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

Meanwhile, the Reserve Bank, in its Financial Stability Report (FSR) on Wednesday, said the rupee had depreciated against the US dollar, reflecting falling terms of trade due to the impact of tariffs and a slowdown in capital flows.