Context
• The rupee weakened mainly due to sustained foreign investor outflows and heightened global uncertainty, despite RBI interventions.
Why the Indian rupee is depreciating
• Persistent FPI outflows: Foreign institutional investors pulling money out of Indian equity markets.
• Strong US dollar: Preference for dollar as safe-haven asset.
• Global geopolitical uncertainty: Major power tensions raise risk aversion.
• Delayed US trade developments: Uncertainty affects global capital flows.
• Limited impact of RBI intervention: Intermittent forex interventions insufficient.
• Rising commodity and safe-haven demand: Higher gold and silver prices reflect risk aversion.
