Author
LoansJagat Team
Read Time
4 Min
18 Jun 2025
We can see that recently markets have seen a sharp reaction to escalating tension on borders. The local currency saw its worst single-day loss in over two years.
Recently, the local currency dropped 84 paise to settle at ₹85.61 per US dollar. This sudden drop wiped out all gains made earlier this year.
Rakshit has a child named Kritika. She is pursuing her master's from Canada. He is required to send her $15,000 for the same. Last week the cost would have been ₹12,71,550 at ₹84.77 per dollar.
Now, at ₹85.61, the same payment would need ₹12,84,150. You can see that it is an increase of ₹12,600 without any change in the dollar amount.
The currency market reacts as soon as military actions begin or border strikes are reported. The average fall in local currency ranges between 1% to 2% in just the first few trading sessions.
Year | Incident | Initial Fall In Rupee | Timeframe |
1999 | Kargil Conflict | -2.5% | 14 days |
2001 | Parliament Attack Fallout | -1.4% | 3 days |
2016 | Cross-Border Surgical Strikes | -1.2% | 1 day |
2019 | Balakot Operations | -1.6% | 3 days |
2025 | Operation Sindoor | -1.5% (Day 1) | Ongoing |
We can see from past incidents that the local currency often depreciates during such situations.
We can see in just one day that the rupee dropped from ₹84.77 to ₹85.61, after Operation Sindoor.
As per the reports of FXStreet and Business Standard, the ₹86.50 mark is now a primary level traders are watching.
Date | Rupee Close (USD-INR) | Change (₹) | Movement (%) |
6th May, 2025 | ₹84.77 | - | - |
7th May, 2025 | ₹85.61 | -0.84 | -0.99% |
8th May, 2025 | ₹85.38 | +0.23 | +0.26% |
9th May, 2025 | ₹85.41 | +0.03 | +0.04% |
In just two days, we can see that the Foreign Institutional Investors have sold securities worth approx. ₹7,800 crore.
Due to loss of such an amount, the value of the rupee falls due to less availability of dollars in the market.
Global crude prices have increased by $4 per barrel during a tense situation. It increases the import bill, pushing down the local currency.
We all know that nowadays, security has tightened, and border rules have become stricter. Such rules have slowed down the exports. Importers, mainly in technology and machinery, are also facing trouble. This gap is the rising demand for US dollars.
Reasons | Impact on Rupee | Influence |
Increase in Defence Cost | Negative | Higher pressure of fiscal deficit |
Higher Prices Of Crude | Negative | Higher cost of import |
Fall In the Stock Market | Negative | Lower confidence of the investor |
The Outflow of FII | Negative | Reduced supply of USD in the markets |
If you or your family member is studying abroad, and you support their education from India. So, now with the fall in rupees, things will become expensive for you. As of now, you will have to send more rupees for the same amount of USD.
You can see that with just a decrease of ₹1, your family’s trip to Europe now would cost ₹19,000 to ₹24,000 more per person. However, this is not an exact amount; it will depend on your travel plan.
Items such as smartphones, laptops, and premium vehicles see a rise in prices because of costlier imports.
Category | Cost (₹84.77) | Cost (₹85.61) | Extra Cost |
Education ($30k) | ₹25,43,100 | ₹25,68,300 | ₹25,200 |
Trip to US ($5k) | ₹4,23,850 | ₹4,28,050 | ₹4,200 |
iPhone ($1.2k) | ₹1,01,724 | ₹1,02,732 | ₹1,008 |
MacBook ($2k) | ₹1,69,540 | ₹1,71,220 | ₹1,680 |
The following sectors generally benefit from a falling rupee:
Sector | Effect Of Weak Rupee | Reason |
IT Services | Positive | Income is in dollars |
Pharma Export | Positive | Exports gain due to billing in dollar |
Aviation | Negative | Increase in cost of fuel and lease of aircraft |
Auto (Luxury) | Negative | Imports become costly |
Steel Export | Positive | Prices become more competitive |
Let’s look at the predictions made by financial institutions for the rupee in the coming weeks:
Source | Forecast (USD-INR) | Conditions |
Axis Bank | ₹86.50 | Continued border tension |
Nomura | ₹84.70 | With support from central bank |
ICICI Securities | ₹87.00 | If crude stays above $90 per barrel |
Business Standard | ₹85.00 to 85.30 | If peace talks resume |
The war-like situation between India and Pakistan has shown us how vulnerable currency markets are to sudden shocks.
In just two sessions, the rupee has already lost nearly 1.5%. However, it can recover temporarily. The trend mainly depends on the ground situation and the central bank's response.
If you are dealing with overseas payments, you are advised to hedge or make payments early. For exporters, this may be a short window of benefit.
In such situations, we can only depend on predictions from experts, as nothing is specific.
1. Is it a good time for me to send money internationally?
Yes, you can. If it is possible for you to send it early to avoid further loss.
2. Should I postpone my trip to foreign countries?
Yes, if possible you must postpone it.
3. What is the current rate of exchange?
On 10th May, 2025 the market closed at ₹85.35.
4. Which industry takes advantage of falling rupee value?
Industries based on exports such as IT and pharma.
About the Author
LoansJagat Team
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