Exchange rate of INR is depreciating consistently against USD & Euro
Why is this happening?
- Deliberate strategy to insulate exporters on high US tariffs
- Deliberate strategy to insulate exporters on high price increases due to Iran war
- Deliberate strategy to support local manufacturing by making imports expensive
- Oil prices refusing to ease out which means more forex required to buy oil
- Foreign investors have withdrawn more than USD 20 billion from Indian equities in the first four months of 2026, surpassing the record annual outflow seen in the whole of last year, due to uncertainties in growth & global policy changes especially of US
- Interest rates are dropping for the past one year despite price increases (see below chart), expectations of interest rate increases are high, meaning higher inflation
Outlook looks quite challenging with inflation looking imminent to go up, interest rates will go up which means there will be further depreciation of rupee. 100 to USD?
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