Rupee Falls 5 Paise to 88.21 Due to USD Strength and IT Sector Fears

Mumbai, September 22, 2025 – The rupee fell marginally in initial trade, down 5 paise at ₹88.21 per US dollar. Domestic equity weakness, particularly in the IT sector, along with a strong dollar and unease from increased US-H1B visa charges, were the major causes putting pressure on the currency.

Factors Driving the Weakness

The rupee started at about ₹88.20 and moved to ₹88.21 against the dollar, lower from the previous close of ₹88.16. The US action to charge a $100,000 fee on fresh H-1B visa requests would increase expenses for India’s software companies, lower foreign project margins, and perhaps spur equity outflows.

On the international front, the US dollar index has firmed up, supported partly by rising US yields. It is believed that the dollar momentum alongside poor risk appetite among investors will continue to put pressure on emerging market currencies such as the rupee.

Latest Policy and Sentiment Developments

The increase in the H-1B visa fee has created a lot of anxiety. Industry associations and the Indian government have emphasized that the increased fee is only for new visa petitions and will not affect current visa holders or renewals. This assurance has alleviated some short-term concerns but the long-term effects on IT export growth are still unclear.

An Emkay report estimates that India’s IT services export growth will decelerate to less than 4 per cent in FY26 as a result of the extra expense and disruptions caused by the visa fee hike. Analysts are also observing to check whether firms increase U.S. hiring onshore, which would change margins.

Future Outlook

The rupee will continue to be under pressure in the near term. Demand from offshore flows, policy risk to the IT industry, and dollar strength globally are going to be negatives. But give-slow clarity on what the visa fee is for (new applications only and not existing holders) may cap the downside if risk perceptions stabilize.

With prevailing trends, the traders will also be keeping an eye on foreign institutional flows, the forthcoming US macroeconomic data, and domestic IT earnings reports to ascertain whether they support or oppose the negative bias. If these are aligned in favour, it can help put a lid on the rupee’s weakness; otherwise, downside risk towards ₹88.50 is possible under duress.

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