Indian Rupee Dips To All-Time Low, US H-1B Visa Concerns Drag Currency Down

The Indian rupee dropped to an all-time low on Tuesday, with pressure intensifying after the US raised visa fees, worsening an already weak outlook for the currency.

The rupee declined to a lifetime low of 88.62 to the U.S. dollar, surpassing the prior record of 88.4550 hit about two weeks ago. Indian NRIs sending remitting money home would now receive ₹24.1 per dirham.

The currency's decline followed a significant increase in H-1B visa fees, which could slow the deployment of Indian workers to U.S. clients and potentially hit the profitability of India's IT sector. That, in turn, may weigh on equity flows, with foreign investors re-evaluating their stakes in IT firms.

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Additionally, lower deployment of workers to the U.S. could weigh on remittances, hurting dollar inflows into India. The timing of the visa fee hike compounds existing external pressures, with 50% U.S. tariffs on Indian goods - the highest among Asian peers - already expected to dent exports.

"For the rupee, the pressures have increased in terms of tariffs kicking in at 50% and the recent visa news is incrementally negative for equity flows, especially into the IT sector," Dhiraj Nim, FX strategist at ANZ Bank, said.

The Reserve Bank of India has room to let the rupee weaken at a measured pace, he said. With inflation expected at around 4–4.5% in fiscal year 2026-27, a modest decline would be manageable, he added.

There are indications that the RBI is following this approach. The central bank has intervened in the market to support to the rupee without defending any specific level.

Interventions are calibrated to ensure that the currency's depreciation remains orderly, allowing the rupee to adjust without triggering market disruption, bankers said.

On Tuesday, the central bank likely sold dollars via state-run banks near the 88.50 level to support the rupee before allowing it to slide further.

The rupee has lagged its Asian peers year-to-date, failing to benefit from the dollar index's recent decline. Heavy U.S. tariffs on Indian goods have dampened export prospects and curtailed foreign capital inflows, weighing on the currency.

Foreign investors have taken out more than $15 billion from Indian equities in 2025.

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