The Indian rupee ended 2025 near 89.88 against the US dollar, marking its steepest annual fall in three years, depreciating by nearly 5%. Persistent foreign fund outflows, a widening trade deficit, and the impact of US tariffs were key drivers. Analysts suggest the Reserve Bank of India (RBI) is allowing more flexibility while intervening to smooth excessive moves. Progress on a paused India-US trade deal is seen as a potential factor for near-term stability, though underlying pressures may persist into 2026.