Why the Rupee's Slide to ₹91 May Not Spell Doom for India
The Indian rupee has depreciated by nearly 6.5% this fiscal year, breaching the 91-per-dollar mark, making it one of Asia's worst-performing currencies. Despite this, experts like Sanjeev Sanyal argue that a weaker rupee doesn't automatically signal economic trouble, especially for a high-growth economy like India. This perspective suggests India's economic fundamentals might be stronger than the currency's performance indicates, impacting future trade policies and investment strategies.
The Indian rupee has seen a noticeable depreciation this fiscal year, sliding by nearly 6.5% and breaching the 91-per-dollar mark, making it one of Asia's weakest performers. However, this weakness might not be a symptom of deeper economic woes, according to experts like Sanjeev Sanyal from the Economic Advisory Council to the Prime Minister. He argues that a declining currency can often accompany strong economic growth, citing historical parallels with Japan and China.
Sanyal suggests that the Reserve Bank of India (RBI) has largely maintained a hands-off approach since the 1990s, intervening primarily to smooth out extreme volatility rather than to dictate the rupee's trajectory. This philosophy allows the currency to find its natural level. While foreign portfolio investor (FPI) outflows and concerns over an India-US trade deal contribute to short-term fluctuations, analysts highlight that no single factor accounts for a significant portion of the rupee's movement, indicating broader economic forces are at play.
The rupee’s slide does have tangible impacts, particularly for those planning education abroad. For Indian students heading to the US in 2026, the depreciation could add substantial costs, potentially increasing tuition and living expenses by several lakh rupees annually. This financial strain is prompting students and families to re-evaluate their strategies, exploring scholarships, dollar-denominated loans, and considering destinations with more favorable post-study work opportunities.
Despite these challenges, a weaker rupee isn't necessarily a negative for the wider economy, especially if it doesn't fuel domestic inflation or hinder export competitiveness. Improved trade data, indicating a narrowing trade deficit, could offer some stability. The government's active pursuit of trade agreements with major partners like the European Union and the US also aims to bolster India's economic position without compromising national interests, suggesting a strategic outlook beyond immediate currency movements.
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