Indian Rupee Depreciation in a Volatile Global Economy
The Indian rupee has witnessed a sharp decline against the US dollar in recent months. In May 2026, the rupee-dollar exchange rate crossed Rs.96 per dollar compared to around Rs.85 a year earlier. The depreciation reflects rising external pressures, global uncertainty, and structural challenges in the Indian economy.
Causes of Rupee Weakening
Domestic Factors
- Widening Current Account Deficit (CAD): India’s imports, especially crude oil, electronics, fertilizers, and machinery, continue to exceed exports. This increases demand for dollars and weakens the rupee.
- Foreign Capital Outflows (FII & FPI Sell-offs): Foreign investors often withdraw investments from Indian equity and debt markets during ....
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