What is the one economic thingy that everyone talks about, apart from the budget. THE CURRENCY. And why is it so? Because it affects everyone and everything.
- The young bride’s parents who need to buy jewelry.
- The student in the fancy foreign college who needs to pay his fees. In a global currency!!
- The honeymooners who have been dreaming to have a fancy once in a lifetime honeymoon vacay.
- The truck driver in this freezing time of the year.
- Pretty much everyone else too.
And not to anyone’s surprise the Indian currency has touched the raw 91 to a dollar mark. So resigned have we become that we are making memes. It is like we are resigned to this loose noose hanging around our necks. Actually, it has been like this so for so long that a sliding currency is like a given. And of course, the think tanks give us so many bundles of nonsense, which frankly is difficult to digest anymore.
Exports become more profitable in terms of INR realisation, so we can export more and earn more. What utter nonsense. In the last 5 years, INR versus USD have fallen by more than 20 percent. Have we increased our exports by even .01 per cent??? No, we have fallen in the global percentage game. It is high time that our mandarins realise that the aware buyer buys the better product rather than the cheaper one. And if the cheaper one comes with little or no differentiation then what actually is he paying for?
The economy has become more competitive?? Really?? In the last two decades what has been the taper on FDI and FII inflows? Seriously negative. And ceteris Paribas, with the global currencies packing a bigger punch compared to what they did a decade back or more, why are they not lining up to buy rupee assets or invest in financial products. Here., I wonder!!
Our technology exports need our support. Seriously?? I mean, over the last 4 decades plus we have done nothing but relied only on planting cheap labour or copy-cat solutions abroad? Surely by now we must have gotten some more wisdom and a lot more exposure to go up the value chain. Or haven’t we? Our goods exports have a lot of imports embedded into it across a lot many sectors. Defense for instance. So, if the imports were cheaper wouldn’t we have had a better price point for our exports of these products?
Factoring inflation into the equation: Yes yes the Real Effective Exchange mechanism. Inflation versus the US could be a cause for the USD uptick but what about Egypt, Laos, Thailand and many of the other countries in Africa. Compared to these countries too our currency has fallen. Even this reason alone sounds lame now. Not fallen. Plunged.
Dollar has risen, rupee hasn’t fallen: How lame is this. It is so not deserving of a reply. It is so deserving of scorn. The INR has actually fallen across most of the currencies.
And all this in the time of complete absence of our regular and favourite bugbears. OIL is imported to run the Indian economy so we need to acquire dollars and spend it on every purchase. Ohh come on. Even as I write this the brent prices have come below the 60 USD mark. And it is winter. And Russia still cannot supply to the world because of sanctions. Imagine if there is an end to the war in Europe. Prices will fall further. And our services export has surged. So our trade deficit is supposed to shrink.
There is something fundamentally wrong in our performance somewhere.
Or else why does the global opinion go so much against our currency.
A thought-provoking piece, and your concern about the long-term trajectory of the rupee is entirely valid. Persistent currency erosion should worry any economy with global ambitions.
However, I think the current phase of rupee weakness needs to be seen less as a verdict on economic failure and more as a policy choice within a hostile global cycle. India today has sufficient forex reserves to defend a much stronger level if it chose to, but doing so aggressively would be an artificial intervention—risking reserve depletion and inviting speculative attacks. The RBI appears to be prioritising stability over optics.
What’s driving the pressure now seems largely structural and flow-driven: FDI/FPI profit booking in a strong-dollar world, heavy dependence on essential imports (energy, electronics, capital goods), US tariff-led global tightening, and even self-reinforcing behaviour where importers hedge dollars in anticipation of further weakness. Importantly, this has not spilled over into runaway inflation—CPI remains broadly contained—suggesting an orderly, managed adjustment rather than loss of control.
Where I fully agree with you is the long run. A country cannot aspire to sustained economic and strategic power while accepting perpetual currency erosion. The solution, though, lies less in defending a number and more in structural fixes—energy security, manufacturing depth, export diversification, and productivity growth.
Perhaps the real debate is not about “shame” today, but about ensuring that tolerance in the short term does not become complacency over decades.