Experts on USD's historic peak: Should investors cash in now or wait

Experts weigh in on the dollar's surge against rupee, what it means for Indian investors, and whether to book profits now or hold

Last week, the US dollar surged to a record high against the Indian rupee, touching Rs 88.8 on October 6, 2025. For many investors with forex exposure, this milestone may have been tempting to book profits.

 

But is it the right time to exit? Or should investors hold on for further gains? Experts say the answer isn’t straightforward. The outlook depends on global macroeconomic shifts, domestic policies, and individual strategies.

 

“While safe-haven flows and Fed commentary on rate policy have supported the dollar, India-specific pressures such as tariffs and capital outflows have played a bigger role in the recent USD/INR highs,” says Ross Maxwell, global strategy lead at VT Markets.

 

 

Navy Vijay Ramavat, managing director of Indira Group, adds, “Higher US interest rates, global uncertainty, and weakness

 

in other major currencies have made the dollar more attractive. Geopolitical shocks have further reinforced demand for the greenback.”

 

“Trade tensions, US tariffs, slowing exports, and significant capital outflows have dented investor confidence, making the rupee one of Asia’s most vulnerable currencies this year,” said Naveen Mathur, director of commodities & currencies at Anand Rathi Share and Stock Brokers Limited.

 

Why USD-INR is at record highs

Experts agree that the recent spike in USD is driven by a combination of global and domestic factors. Maxwell says India-specific pressures, such as capital outflows and tariffs have had a bigger impact than global USD strength alone.

 

Ramavat points to higher US interest rates, global uncertainty, and weakness in other major economies as key drivers.

 

Mathur underlines that US tariffs on Indian goods, a weaker export outlook, and net capital outflows of nearly $11 billion this year have eroded investor confidence in the rupee.

 

How does this impact Indian investors?

The experts stress that the USD’s strength presents both opportunities and risks:

 

Opportunities:

 

Exporters: “A stronger dollar benefits exporters, as each dollar earned translates into more rupees. This can offset the impact of higher tariffs,” explains Ramavat

 

USD-denominated investments: “If you hold USD-denominated assets, they appreciate in INR terms even if the dollar value remains unchanged,” notes Maxwell.

 

Risks:

 

Importers and debt servicing: Maxwell cautions, “For companies importing goods priced in USD, costs rise sharply. Similarly, servicing dollar-denominated debt becomes more expensive in INR.”

 

Hedging costs: Ramavat cautions that hedging strategies can add costs, especially if executed poorly.

 

“The net impact of a strong dollar depends on whether your earnings or liabilities are in dollars. Importers and those with dollar loans face higher costs, while exporters and holders of dollar assets gain,” summarises Mathur

 

Should investors book profits now?

 

Experts say there is no one-size-fits-all answer.

 

Maxwell advises partial profit booking for those with significant exposure while retaining some position for potential further gains. “Keep an eye on USD yields, foreign inflows, RBI moves, and Fed commentary to make informed exits,” he says.

 

Ramavat stresses monitoring technical and fundamental signals. “If momentum slows, or if macroeconomic conditions change, such as Fed dovishness or easing global tensions, it may be time to book profits,” he explains.

 

Mathur cautions that “tariff uncertainties and weaker corporate results could push USD-INR to Rs 90– 91 before year-end. Investors should consider partial profit booking now rather than exiting fully.”

 

Outlook for USD-INR

Maxwell sees some further upside for USD but expects RBI intervention to limit excessive depreciation.

 

Ramavat foresees range-bound movement with possible short-term pullbacks.

 

Mathur believes domestic demand recovery and GST rationalisation could support the rupee, but trade uncertainties will remain a key risk.

 

“Lock in gains where possible, hedge wisely, and keep watching market signals before making large exits, ” conclude Ramavat.