Rupee at 97: Who Quietly Gets Richer
A weaker rupee is a tax on anyone who spends in dollars and a quiet bonus for anyone who earns or owns them. On 9 October the rupee closed at 96.78 per dollar, a whisker from its record low. Here is who paid, who gained, and what a currency move does to a portfolio that never left India.
A rate hike that the rupee ignored
On 7 October the RBI raised the repo rate 25 bps to 5.50%, its first hike since February 2023, and the rupee still fell 22 paise to 96.57 that day (GoldenPi). By Friday it closed at 96.78, a whisker from the 96.96 record set in May (Swarajya).
Three forces outweighed the hike:
- Oil. Brent stayed above $100 a barrel for most of the month before the meeting.
- Foreign selling. FPIs pulled a record ₹3.08 trillion out of Indian equities in 2026 through 12 October, including ₹35,861 crore in September (India IPO / Business Standard).
- The Fed. A 25 bp US hike in September, with the 10-year Treasury above 5.2%, shrank the rate gap that once kept foreign money in India.
The strain showed everywhere. Forex reserves fell a record $18.3 billion in the week to 25 September, and the 10-year G-sec closed at 7.24%, its highest since December 2023. On 10 October the RBI announced a special dollar window for IOC, BPCL and HPCL from 12 October, pulling their oil bills out of the spot market (Business Today). The rupee recovered to 94.91 by 19 October, but that is still about 5% weaker than the roughly 90 it ended 2025 at.
The dividing line is simple: who pays in dollars, and who earns or owns them.
The losers: anyone who pays in dollars
Oil marketers sit at the front of the queue. In late September ICRA estimated state-run OMCs were losing ₹530 crore a day on petrol, diesel and LPG (Business Standard), with the Indian crude basket averaging $113.9 a barrel in September against $69.61 a year earlier (Moneycontrol). A weaker rupee multiplies every one of those dollar bills. The RBI’s new window changes who sells them the dollars, not what the dollars cost.
Start with the import bill, because everything else prices off it. India imports roughly 88% of the crude it refines (The Hindu), and the April-August oil import bill rose 48% year on year to about $75 billion as prices and the rupee moved together (Moneycontrol). Airlines carry the same exposure without a hedge. Jet fuel is roughly 40% of an airline’s operating cost (CNBC-TV18), so a weaker rupee feeds straight into fares within weeks.
Importers of electronics, chemicals and machinery face the same maths with less political cover. They either absorb the margin hit or pass it on, which is why the RBI now names imported inflation as a reason to tighten.
The parent paying US tuition gets a fee increase nobody announced. A $60,000 annual bill cost ₹54 lakh at 90 per dollar; at 96.8 it is ₹58.1 lakh, about ₹4.1 lakh more for the same degree.
The family planning Europe feels it too, if less sharply. The euro cost ₹106.5 on 15 October against ₹102.9 a year earlier (ECB), so a €5,000 trip now costs roughly ₹18,000 more.
The borrower repaying a foreign education loan feels it for years. Each $1,000 of monthly repayment now costs about ₹6,800 more than it did at 90, which over a five-year repayment adds roughly ₹4 lakh to the same loan.
The family shopping for a wedding sits on the wrong side of the same trade. Rupee gold ended 2025 at a record after a roughly 72% year (BullionVault), the duty rise to 15% from May is still in the price (Reuters), and every dip in the rupee lifts the local quote even when the world market stands still.
The quiet winners: anyone who earns or owns dollars
IT exporters show the effect most cleanly. TCS’s September-quarter revenue rose 11.2% year on year in rupees but only 2.8% in constant currency and 2.4% in dollars (TCS). Most of that gap is the rupee rather than new business, though hedging dulls it in practice: TCS’s operating margin stayed flat at 24.0% even with the currency at its back. Salaries are paid in rupees, so what survives of the windfall lands near the margin line.
Pharma exporters work the same way. US generics are billed in dollars while plants, staff and R&D are paid in rupees, so every paisa of depreciation widens the spread. The caveat for both sectors: a weak currency flatters a quarter but cannot create demand.
Companies that both import and export land in the middle. A drugmaker importing dollar-priced raw material for a dollar-priced drug washes the currency out; what matters is the split between rupee costs and dollar revenue. The higher the rupee share of costs and the dollar share of revenue, the bigger the gain from a slide like this one.
The same arithmetic reaches the freelance designer in Indore billing $3,000 a month. At 90 that invoice paid ₹2.70 lakh; at 96.8 it pays ₹2.90 lakh. No new clients, no rate increase, just the conversion.
NRI remitters get more house for the same paycheck. A $1,000 transfer bought about ₹90,000 at the end of 2025 and ₹96,800 at the October low. Many NRIs went one better and kept their money in dollars: non-resident deposit inflows hit $119.2 billion in April–August 2026, against $5.6 billion a year earlier, mostly in foreign-currency FCNR(B) accounts (Business Upturn, RBI data).
The flows were already at records before the slide. NRIs sent home $135.46 billion in FY25 (Economic Times), and deposits in FCNR(B) accounts reached $127 billion by August as many chose to hold dollars rather than convert (Business Standard). A weaker rupee raises the rupee value of every one of those transfers.
Holders of dollar or gold assets gain without doing anything. Gold is priced globally in dollars, so its rupee price is the dollar price times the exchange rate. When the rupee slides, Indian gold rises even on days the global price stands still. In early September dollar gold sat about 18% below its January record, yet rupee gold was near an all-time high, lifted by the weaker rupee and May’s import-duty rise from 6% to 15% (PrimeXBT).
The 2025 scorecard shows the split. Dollar gold rose about 65% in 2025, its best year since 1979 (BullionVault). Rupee gold rose about 72%, because the rupee’s 5% fall that year stacked on top (The Hindu BusinessLine). Same metal, same year, a different result depending on which currency you save in.
The portfolio effect of a 10% fall
A 10% rupee fall, from 90 to 100 per dollar, makes every dollar 11.1% dearer, and the same arithmetic runs in both directions. Here is what that does to common household exposures, holding all dollar prices constant.
The last row is the one most investors never look at. A portfolio of FDs, Indian bonds and domestic stocks shows no loss on its statement, yet it buys 10% less of the world. If any of your future spending is in dollars, a rupee-only portfolio carries a currency bet you did not choose.
Run the same test on your own numbers. Add up what you will spend in dollars over the next decade: fees, travel, a child’s degree, a plan to retire abroad. That share of your savings needs a dollar or gold home, whatever the rupee does next.
Qode Angle: currency as a hidden return driver
Over the last ten calendar years, a modest gold sleeve beat a rupee-only equity portfolio, and about two-thirds of its edge came from the rupee itself. We compared the Nifty 50 TRI on its own with 80/20 and 60/40 Nifty/gold mixes, rebalanced each January, for 2016–2025. Gold’s rupee return is its dollar return compounded with the change in USD/INR.
The rupee lost about 3.1% a year against the dollar over the decade, from 66.3 to 90.0. That turned gold’s 14.6% annual dollar return into 18.2% in rupees, and added 0.8 to 1.5 percentage points a year to the blended portfolios. A rupee-only investor never saw that line item.
The blends did more than average the two assets. Gold and Indian equities rarely fall in the same year, so the January reset quietly sells what ran and buys what lagged. Over a decade that discipline added roughly half a percentage point a year on top of the weighted returns, before the rupee’s slide added its own.
One honest caveat: through 2024 the three portfolios compounded within 0.15 points of each other. Gold’s 72% rupee gain in 2025 did the heavy lifting. For nine years the sleeve’s real job was quieter: it cut volatility from 9.0% to 7.5% at 20% weight without costing return. Calendar-year figures also hide intra-year crashes such as March 2020’s 38% Nifty fall, where gold’s cushioning mattered most.
This is the logic behind the gold sleeve in Qode All Weather. The strategy holds roughly 60% equities split across momentum and low-volatility factor ETFs, and roughly 40% gold ETFs, rebalanced by rules rather than forecasts (Qode QuickTake). Gold was chosen to dampen equity drawdowns, but it also gives the portfolio a built-in dollar exposure. When the rupee slid toward 97 this month, that sleeve rose in rupee terms without any trade.
What next
The RBI has told markets the next move is a hike or a pause, not a cut. HSBC Global Investment Research expects another 25 bps in December, and SBI Research sees the repo rate at 5.75% by the end of 2026 (GoldenPi). The October minutes are due on 21 October and the next MPC meets on 2–4 December.
The October policy made the shift official: the stance moved to calibrated tightening, with the SDF at 5.25% and the MSF at 5.75% (RBI). Two members still voted to stay neutral, which is why a December hike is expected rather than certain (GoldenPi).
Higher rates help the rupee only at the margin. The bigger levers are oil, which was still near $108 a barrel on 19 October, and whether foreign selling slows. The rupee’s 2% rebound in mid-October shows how fast the tide can turn, which is exactly why currency should be a position you size, not a forecast you bet on.
The cushion is thinner than it looks. Forex reserves stand at about $757 billion (Business Standard), down $18.3 billion in a single week of defence, and every further defence spends more. If Brent holds above $100 and foreign selling continues, 97 stops being the ceiling. If oil cools or the Fed blinks, the same maths runs in reverse, as the mid-October rebound showed.
Between now and 4 December the calendar is stacked: the October minutes land on 21 October, and every weekly reserves print will be read as a stress gauge. The RBI has room to act. What it cannot do is cheapen oil.
The bottom line
A weak rupee does not make an Indian portfolio poorer on paper. It makes it poorer in what it can buy abroad, and richer only if part of it already sits outside the rupee. Exporters, NRIs and gold holders did not predict 97. They were simply already on the right side of it. The goal is not to call the next move in USD/INR but to make sure your portfolio is not silently short the dollar.
A rupee-only portfolio is a position, whether you chose it or not. The households and companies that came through this month best were the ones that had decided their currency mix before the currency moved. That decision is still open to everyone else.
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