The Rupee's Rollercoaster Ride: Navigating Economic Turbulence

The Indian rupee faces a steep decline amid trade disruptions, foreign fund outflows, and tariff impacts. Experts foresee volatility until a US trade deal is finalized. The currency, weakened by capital account imbalances, is expected to stabilize in late FY27 once global economic conditions improve.

The Indian rupee finds itself in a turbulent phase, buffeted by global trade disruptions, foreign fund outflows, and the lingering shadow of tariff impacts. In this complex scenario, experts anticipate the rupee's descent to persist unless India finalizes a trade deal with the US, its largest trading partner.

Since January, the rupee has plunged nearly 5% from 85 to 91 against the dollar, marking severe depreciation against major currencies. This plunge is notably intense among Asian counterparts despite a weakening dollar index and stagnant international crude oil prices.

As foreign investors shift focus to emerging markets, a net decline in FDI has exacerbated the rupee's fall. While the government attributes the slide to trade gaps and stagnant US trade negotiations, analysts point to a capital account crisis as the primary cause. Nevertheless, India's robust macroeconomic fundamentals offer hope for future stabilization.

(With inputs from agencies.)