RBI Policy Shifts Cause Rupee Turmoil Amid Global Trade Tensions

Recent RBI policy adjustments under Governor Sanjay Malhotra have led to a notable depreciation of the Indian Rupee against the US Dollar, surpassing yearly declines of previous years. This depreciation is further fueled by international trade tensions initiated by US policy changes under President Trump.

Under the leadership of Governor Sanjay Malhotra, the Reserve Bank of India (RBI) has adopted new policy measures that have caused significant turbulence for the Indian Rupee against the US Dollar.

According to a recent report by Union Bank of India, the Rupee has depreciated by 1.8 percent against the USD as of February 28, 2025, a decline that has already surpassed the entire depreciation experienced in 2023. This financial situation has sparked concerns across market analysts, pointing to a departure from the more stable currency conditions favored by former RBI Governor Shaktikanta Das.

Substantial trade tensions, potentially exacerbated by revised US trade policies under President Donald Trump, are further complicating the situation. The 25 percent tariff announcement on goods from Canada and Mexico, despite a 30-day delay, has already pushed the Rupee past the 87.00 mark against the USD. With the US as India's largest export market, any forthcoming reciprocal tariffs after April 1 could severely impact Indian trade dynamics.

(With inputs from agencies.)