The Indian rupee touched a fresh record low on Tuesday, September 23, slipping to 88.46 against the US dollar after the US announced higher H-1B visa fees, raising concerns over the currency’s outlook.

Rupee breaches previous lows

On Monday, the rupee had closed 12 paise lower at 88.28 against the greenback. In interbank trading on Tuesday, it opened at 88.41 but fell further to an intraday low of 88.53, marking a 25-paise decline from the previous close. The previous record low of 88.4550 was set just two weeks earlier.

Visa fee hike impacts IT sector and remittances

The sharp depreciation is largely attributed to the steep increase in H-1B visa fees by the US, which could slow the deployment of Indian IT professionals abroad and squeeze profit margins for Indian tech companies. Analysts warn that this may also dampen foreign equity inflows as investors reassess exposure to Indian IT stocks.

Reduced worker deployment could further impact remittance inflows, limiting dollar earnings for India. The visa fee hike comes amid growing pressure from US tariffs on Indian exports, which currently stand at 50%, the steepest in Asia, threatening trade and economic growth.

Expert insights

Dhiraj Nim, FX strategist at ANZ Bank, told Reuters that the Reserve Bank of India (RBI) has the flexibility to allow a gradual depreciation of the rupee. “With inflation expected to remain in the 4–4.5% range for FY 2026-27, a slight weakening of the rupee would be manageable,” he said.

Underperformance against Asian currencies

So far in 2025, the rupee has lagged behind other Asian currencies, missing out on gains from the recent decline in the US dollar index. Heavy US tariffs on Indian exports have weakened trade prospects and reduced foreign capital inflows. According to reports, foreign investors have pulled out over $15 billion from Indian equities this year alone.

Outlook

Economists say that while the rupee’s decline poses short-term concerns, gradual adjustments and policy measures by the RBI could stabilise the currency. However, continued external pressures from trade and visa-related restrictions could keep the currency under pressure in the near term.