The rupee recently dropped to an all-time low of ₹95 against the US dollar during the tenure of the Modi government.
The Indian rupee recently hit an all-time low of ₹95 against the US dollar, a significant milestone under the Modi government. This decline has raised concerns about the strength of the rupee and its potential impact on the economy, especially in terms of inflation, import costs, and overall economic stability. Various factors, including global market trends, foreign investment inflows, and domestic economic policies, can contribute to such fluctuations in the currency value.
Why is the rupee falling?
The Indian rupee is falling mainly because demand for US dollars is higher than supply. Rising crude-oil prices increase India’s import bill because the country depends heavily on imported oil. Foreign investors withdrawing money from Indian markets also increases demand for dollars. At the same time, global geopolitical tensions make investors prefer the US dollar as a safer asset.
India’s trade deficit, where imports exceed exports, adds further pressure on the rupee. The Reserve Bank of India (RBI) has been using its foreign-exchange reserves to limit the rupee’s decline, but strong global and domestic pressures continue to weigh on its value.
