How to safeguard your foreign currency goals against a weakening rupee

The rupee touched a low of 96.96 against the US dollar on May 20.

- Sudipta Mitu

It has fallen 7.2 per cent so far in 2026, making it the worst-performing currency in Asia. The rupee’s weakness could hit both household budgets and Indians’ foreign currency denominated goals, such as foreign university education for children, foreign travel, foreign treatment, and so on.

Why the rupee is under pressure

Several factors are weighing on the rupee’s value against the dollar. Higher crude-oil and energy prices are driving India’s import bill up and increasing the demand for dollars. India imports over 80 per cent of its crude-oil requirement.

A stronger United States dollar and higher global yields have added to the pressure. Foreign portfolio outflows and sluggish capital inflows have also hurt the currency. More than $23 billion has moved out of Indian assets since March 2026.

How it affects households

A weaker rupee erodes purchasing power and raises the cost of living through imported inflation, even for households that do not spend directly in dollars. Imported inputs and finished products become costlier, and those increases can pass through to consumers.

Dollar-linked goals become more expensive. Overseas education, foreign travel, and other foreign-currency expenses require more rupees for every dollar spent.

Investors may also feel the impact. Domestic savings can lose purchasing power, while fixed-income assets may deliver weaker real returns if inflation rises alongside rupee depreciation.

Expenses that may rise

Fuel-linked costs are among the first to come under pressure. Petrol, diesel, liquefied petroleum gas (LPG), transport, and logistics are becoming costlier. Higher transportation expenses will flow into the prices of goods.