Currency – Rupee Slides Past 95 Mark Amid Political Reactions

Currency – India’s currency market witnessed a sharp movement this week as the rupee weakened beyond the 95 mark against the US dollar, triggering political reactions and raising fresh concerns over economic stability. The development has sparked debate among leaders and experts, with questions being raised about its impact on trade, industry, and the broader economy.

Political Leaders Criticise Government Over Currency Fall

Congress leader Randeep Singh Surjewala strongly criticised the central government, linking the rupee’s decline to national economic management. Speaking in Bengaluru, he recalled earlier remarks made by Prime Minister Narendra Modi during his tenure as Gujarat Chief Minister, when the rupee’s depreciation was used to question the credibility of the then government.

Surjewala pointed out that the exchange rate has now worsened significantly compared to earlier years, arguing that the falling rupee is putting pressure on exports, businesses, and trade activities. He questioned whether the same standards of accountability apply today, given the current situation.

Call for Government Intervention

Karnataka Deputy Chief Minister DK Shivakumar also expressed concern over the situation, highlighting its impact on ordinary citizens. He stated that the weakening rupee and rising dollar are likely to increase costs across sectors, ultimately affecting household expenses.

Shivakumar urged the central government to review its economic policies and take corrective steps to stabilise the currency. He emphasised the need for timely intervention to restore normal conditions in the financial system.

Market Factors Driving the Rupee’s Weakness

The rupee’s recent fall is largely attributed to global and domestic economic pressures. It touched a record low of 95.23 against the US dollar earlier this week, reflecting heightened volatility in both domestic and international currency markets.

One of the key factors behind the decline is the sustained rise in crude oil prices, with Brent crude trading above 100 dollars per barrel. Since India depends heavily on oil imports, higher prices increase demand for dollars, thereby weakening the rupee.

Additionally, foreign portfolio investors have been pulling funds out of Indian equity markets. Data shows that in March alone, foreign investors sold equities worth over Rs 1.3 lakh crore, adding further pressure on the domestic currency.

RBI Measures and Temporary Recovery

The Reserve Bank of India has taken steps to manage the situation, including placing limits on net open positions in the onshore currency market. This move provided brief support to the rupee, which opened stronger at 93.58 in early trading.

However, the relief was short-lived as selling pressure resumed, pushing the currency back toward the 95 level. Analysts note that while such measures can reduce volatility in the short term, broader economic factors continue to influence the overall trend.

Outlook Remains Uncertain

Experts believe the rupee may continue to experience fluctuations in the near term due to ongoing global uncertainties and domestic economic challenges. While some stability is expected, forecasts suggest the currency could settle within a range of 92.50 to 93.50 against the US dollar if conditions improve.

The coming weeks will be crucial as policymakers, investors, and businesses closely monitor developments in oil prices, capital flows, and monetary policy decisions. The direction of these factors will determine whether the rupee can regain stability or face further pressure.