Rupee's Rollercoaster: Navigating Global Turbulence

The Indian rupee is facing a steep decline amid global trade disruptions and foreign fund outflows. With depreciation influenced by a widening trade deficit and volatile capital flows, experts anticipate further weakening. However, strong domestic macroeconomic fundamentals offer a hopeful long-term outlook for the currency's stabilization.

The Indian rupee is battling a severe decline, affected by global trade disruptions and significant foreign fund outflows, without signs of arresting its slide. Despite robust domestic macroeconomic factors, the currency's descent persists as it faces tariff impacts and awaits a trade deal with the US.

Since January, the Indian currency has depreciated by nearly 5% against the dollar, marking its worst performance among Asian peers. Experts underscore the weakening capital inflows, including FDI, as central to the rupee's struggles. The Reserve Bank of India acknowledges the need for stable trade partnerships to stabilize currency value.

Analysts highlight the capital account crisis as a primary driver for the rupee's drop, compounded by shortage in net foreign investments. The government attributes the depreciation to a widening trade gap. Despite short-term challenges, the rupee could appreciate in the long term, supported by solid economic fundamentals.

(With inputs from agencies.)