The IT sector stands out as the primary beneficiary. Historically, every 1–3% depreciation against the US dollar, euro, and pound translates into higher operating margins for Indian IT firms, most of which earn the bulk of their revenue in foreign currency

The Indian rupee plunged to a new all-time low on Friday, decisively breaching the psychologically critical 89-per-dollar mark and triggering widespread concern in currency markets. The sharp slide, which saw the currency weaken past 89.60 at one point, has put the spotlight firmly on the Reserve Bank of India’s (RBI) next steps as global risk-off sentiment and speculative selling pressure intensify.

Market analysts attribute the rupee’s steep fall to a combination of external and domestic factors. Analysts point to four primary drivers behind the sharp decline. First, a resurgent US dollar index that crossed 100 again, fueled by fading expectations of Federal Reserve rate cuts in 2026 and strong global demand for dollar-denominated assets.

Second, India’s widening trade deficit, exacerbated by a drop in exports to the United States following the imposition of new tariffs. Third, lingering uncertainty over the long-awaited India–US mini trade deal, which has kept foreign investors cautious. Fourth, aggressive speculative selling that amplified the downward momentum once key technical levels were breached.

The RBI’s decision to ease its defense of the 88.80–89.00 band in recent sessions also played a pivotal role. Once the central bank allowed the currency to slip past the 89 threshold, speculative selling accelerated, with traders piling on bets against the rupee. Although India’s broader macroeconomic fundamentals remain relatively resilient, elevated gold prices and disappointing trade and balance-of-payments data have further fuelled negative sentiment.

The RBI mounted a robust defence to prevent a slide toward the dreaded 90-per-dollar mark. The central bank sold dollars aggressively in both the domestic spot market and the offshore non-deliverable forward (NDF) market, using its ample foreign exchange reserves — still among the world’s largest — as a buffer. While the RBI does not target a fixed exchange rate, its actions were aimed at curbing extreme volatility and restoring orderly market conditions.

For millions of Indian households, the weaker rupee is already being felt in daily life. Imported goods — from fuel and cooking oil to electronics and medicines — have become costlier, adding to inflationary pressures. Planning an international vacation or sending a child abroad for studies now requires significantly more rupees per dollar. A trip that cost Rs 89,000 per $1,000 last year now demands over Rs 89,500 — and potentially much more if the slide continues.

The IT sector stands out as the primary beneficiary. Historically, every 1–3% depreciation against the US dollar, euro, and pound translates into higher operating margins for Indian IT firms, most of which earn the bulk of their revenue in foreign currency. Companies with a higher proportion of offshore employees and significant exposure to the US, European, and UK markets are best positioned to gain. Analysts highlighted L&T Infotech (LTIMindtree), Mindtree, Wipro, Sagility, Coforge, Persistent Systems, and Indegene as key beneficiaries of the weaker rupee.

In contrast, import-dependent sectors are facing heightened pressure. The oil and gas space is witnessing a sharply divergent impact. Upstream exploration companies such as Oil India and ONGC are direct beneficiaries, as crude and gas realizations are dollar-denominated. Brokerages estimate that every one-rupee depreciation lifts Oil India’s income by roughly 1.4% and ONGC’s by 1.2%. Downstream players, however, are under strain. Oil marketing companies (OMCs) like BPCL, HPCL, and Indian Oil face compressed retail margins as higher crude import costs cannot be fully passed on to consumers.

As the rupee hovers near historic lows, investors are closely watching the RBI’s intervention strategy and any developments on the India–US trade front, both of which could determine whether the currency finds a floor or continues its downward spiral in the coming sessions. However, continued delays in trade talks, persistent high oil prices, or renewed global risk aversion could easily push the rupee toward — or even past — the 90 level in the coming months.