The Indian rupee has depreciated around 5% in 2025 and trades near 90 to the US dollar in early January 2026, prompting debate on its economic impact. RBI interventions have stabilized it above 90 at times, amid forecasts of further easing to 92. While boosting exports, it raises import costs and inflation risks
Recent rupee weakness stems from foreign outflows, trade uncertainties, and a softening US dollar, with the currency hitting highs near 91 late last year before RBI support. Economists view moderate depreciation as a tool for competitiveness, though excessive falls strain households and firms. India's current account deficit stays below 1% of GDP, supported by services exports.
Key Highlights
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Boosts export sectors like IT, pharma, textiles, agriculture, and gems by making Indian goods cheaper abroad
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Enhances remittance value for NRIs, increasing inflows in rupees
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Encourages domestic manufacturing over costly imports
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Raises inflation via pricier crude oil, electronics, and essentials
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Increases foreign debt servicing costs for companies and government
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Risks capital flight if depreciation persists unchecked
Sources: Times of India, Reuters, Economic Times, SBI Funds Management, Trading Economics, Drishti IAS