Indian Rupee Slumps to Record Low as U.S. Visa Fee Hikes and Weak Foreign Flows Compound Pressure

Currency markets brace as new U.S. policies hit India’s external sector

The Indian rupee slid to a fresh all-time low of ₹88.62 per U.S. dollar on Tuesday, pressured by a sharp hike in U.S. H-1B visa fees, steep 50% tariffs on Indian exports, and subdued foreign equity and capital flows. Analysts say these combined external headwinds are undermining investor confidence in India’s currency and tech-services sectors.

What’s Causing the Drop

• Trump administration’s increase in H-1B visa fees is feeding worry that the cost of sending Indian workers to U.S. projects will rise, squeezing Indian IT firm profits and reducing remittance inflows.
• U.S. tariffs on Indian goods are at 50%, among the highest in Asia, negatively impacting export competitiveness and foreign investor sentiment.
• Foreign institutional investors have been pulling capital out of Indian equities, subdued flows and concerns about IT sector risk are contributing to downward pressure on the rupee.

Impacts on Markets & Economy

• Equities: India’s IT stocks fell further, hit by both reduced profit outlooks and concerns over demand and pricing in the U.S.
• Remittances: With visa policy tightening, deployment of Indian workers abroad is expected to slow; this could reduce remittances, a steady source of dollar-inflows for many households and the external sector.
• Imports & inflation: A weaker rupee makes imports more expensive fuel, raw materials, tech components, putting upward pressure on inflation. Central banks may be forced to walk a narrow path between supporting the rupee and allowing market adjustment.
• RBI action: The Reserve Bank of India has reportedly intervened in the currency market via state banks around resistance levels, but is allowing a measured depreciation rather than defending fixed levels.

Risks & What to Watch

• Further U.S. policy moves: Any additional increases in visa or tariff restrictions could deepen currency and equity stress.
• Investor sentiment: Continued foreign outflows could spark volatility in both currency and stock markets.
• Domestic macro data: Inflation metrics, current account figures, and export growth will be keenly watched for signs of worsening external imbalance.
• Policy response: How aggressively the RBI intervenes, as well as government steps to offset external headwinds (export incentives, trade agreements, etc.), will matter.

Summary: The rupee’s slide to an all-time low reflects a mix of external pressures, visa fees, tariffs, weak foreign capital, and points to a fragile external outlook for India. Markets are now sensitive to U.S. policy, export performance, and remittance flows. The core theme: external headwinds, not domestic alone, are pushing the rupee and investor confidence to critical levels.