Rupee Depreciation UPSC Update

Key Reasons for Rupee Depreciation

1. Delay in U.S.–India Trade Deal
   • Trade deal pending for 6–7 months.
   • Markets not able to “price in” the deal → uncertainty weakens rupee.
   
2. Lack of Clear Communication from Indian Authorities
   • Limited clarity from RBI and government on rupee management.
   • Creates speculation and nervousness among investors.
   
3. Foreign Investors Selling Indian Assets
   • FIIs moved money to U.S., Europe, Korea, Japan.
   • Causes capital outflow → rupee weakens.
   
4. Strength of U.S. Dollar Globally
   • Higher dollar demand due to U.S. economic conditions.
   

RBI’s Lower Intervention
• Current governor less interventionist; RBI selling fewer dollars → weaker defence of rupee.