Rupee Slides, Not Expert Sentiments

It's fine if the currency depreciates further, based on fundamentals; this could be the best time for it to happen, say experts

- SALIL PANCHAL

THE RUPEE CONTINUES TO fall against the dollar, hitting a new record intra-day low of 90. 74 to the US dollar on December 15, alarming the media, if not economists and the regulator on where the currency could find stability against the dollar. The rupee has now depreciated nearly 5.5 percent against the dollar in 2025. Its depreciation has been higher against the euro (19 percent), CNY (12.5 percent) and pound (12.1 percent).

The public at large would be worried about the falling rupee, with a range of factors playing out: Costlier imports, higher overseas education costs and increased travel costs. But the exchange rate is very much a reflection of the domestic fundamentals and the movement of the dollar (depending on its economy and global macroeconomic conditions).

At this juncture, India’s pace of economic growth has been better-than-expected, with a six-quarter high of 8.2 percent for Q2FY26. It is capital inflows that remain soft. Foreign outflows for 2025 so far have been calculated at near ₹1.61 lakh crore, based on latest NSDL data.

Experts say that the forex reserve accretion is an important factor for the Reserve Bank of India (RBI). If the net dollar inflow is negative or in single digits, it creates challenges in terms of building forex reserves. India has 10 months of import cover, but according to Anubhuti Sahay, head, India economic research at Standard Chartered Bank, the visibility of how much reserves can be built is not there.

ALLOW THE RUPEE TO FALL