The Rupee, The Dollar, and the Investor’s Mindset

On August 26, 2025, the exchange rate of the U.S. Dollar to the Indian Rupee touched 87.76. Some financial news outlets heralded this as a sign of structural weakness in the Indian economy; others saw it as a reflection of U.S. economic strength. But as always, when it comes to currency, markets tend to whisper the truth quietly and let the noise take center stage.

Let us offer a few thoughts :

Currencies Are Mirrors, Not Drivers

Currencies are not the cause of economic strength , they are a reflection of it. The exchange rate is simply the price at which one economy's output trades for another’s. Over the long term, these prices respond to inflation, interest rates, productivity, capital flows, and trust.

India, with its demographic advantages and ongoing digitization, still has immense long-term potential. But like any country, it faces short-term pressures: from inflation to fiscal discipline. A depreciation of the rupee isn’t necessarily a red flag — just as a strong dollar isn't a trophy.

Don't Bet on Currencies — Bet on Businesses

We have said before: “The best protection against inflation is to be exceptionally good at something.” 

The same applies to currency risks. If you're buying productive businesses with pricing power, global demand, and strong moats, they’ll find ways to adapt : whether the rupee is at 65, 75, or 87.

Investors never made their fortune guessing currency moves. They bought great businesses at fair prices and let compounding do the heavy lifting. Investors obsessing over USD/INR might be missing the forest for the trees.

Time Frames Matter

Two months ago, the rupee moved from 87.60 to 87.76. That’s a 0.17% change — barely more than a rounding error in the life of a long-term investor. But to a trader living minute to minute, that might feel like a headline event.

If you’re investing with a five-year view, such movements are background noise. In fact, investors prefer background noise — it gives disciplined investors the chance to buy when others are distracted by the daily tape.

Look for Opportunity, Not Headlines

If currency concerns scare people away from investing in strong Indian businesses, you may find bargains waiting for a patient hand.

That game is played 24/7 by central banks, hedge funds, and algorithms. It’s better to focus on things you can understand — earnings, cash flow, management than on daily exchange rate ticks.

Final Thought

The rupee may be at 87.76 today. It may be at 90 in a year — or 85. Over the long term, value reveals itself. And whether you’re investing in Omaha, Mumbai, or Shanghai, it pays to keep your eyes on the business, not the ticker.