The Indian Rupee (INR) has recently reached historic lows, trading at 90.42 per U.S. dollar, marking a significant 5% depreciation over the past year. This rapid decline is primarily attributed to a widening trade deficit exacerbated by a 50% U.S. tariff on Indian exports, which has intensified demand for foreign currency, further pressuring the rupee. Foreign investment outflows have also played a crucial role, with nearly $17 billion withdrawn from Indian equities this year, negatively impacting the currency's strength.
Analysts note that the Reserve Bank of India (RBI) has shifted its policy stance, allowing the rupee to depreciate in response to these economic challenges. The central bank is reportedly more focused on managing excessive volatility rather than defending a specific exchange rate level, a move reflecting the ongoing pressures from declining dollar inflows.
Recent forecasts from financial experts indicate that if a swift trade deal with the U.S. is not reached, the rupee could fall further, potentially hitting 92 in the near term. The INR has shown some stability against other currencies; for example, the INR to USD is currently at 7-day highs near 0.011084, which is 1.4% below its 3-month average. The INR to EUR is trading at 0.009448, down 2.2% compared to its average, while the INR to GBP at 0.008279 reflects a similar trend, also 2.1% below its respective average. The INR to JPY is at near-average levels, trading around 1.7249.
Given these conditions, individuals and businesses engaging in international transactions may find current rates attractive but should remain aware of the potential for further fluctuations in response to evolving economic and geopolitical developments.
