Why Is the Indian Rupee Falling Against the U.S. Dollar?
In recent months, the Indian rupee has witnessed a steady decline against the U.S. dollar, raising concerns among economists, investors, and everyday consumers. As of early 2025, the rupee is hovering near historic lows, driven by a mix of global pressures and domestic economic dynamics. Let's break down the key reasons behind this depreciation: 1. Strengthening of the U.S. Dollar One of the most direct causes of the rupee's fall is the strength of the U.S. dollar itself. The American economy has shown resilience in recent quarters, with strong job data, robust GDP growth, and rising interest rates set by the Federal Reserve to curb inflation. This has made the U.S. dollar a safe haven for global investors, attracting capital inflows and pushing the dollar higher. As the dollar strengthens, emerging market currencies like the rupee naturally weaken in comparison. 2. Capital Outflows from Emerging Markets With rising interest rates in the U.S., many foreign in...