<p data-start="248" data-end="731">India today finds itself in a perplexing economic moment: a robust domestic economy on one side, and a relentlessly weakening Rupee on the other. The contradiction is glaring. The second quarter GDP has surged by an impressive <strong data-start="475" data-end="483">8.2%</strong>, consumption is rising steadily, the services sector is flourishing, and financial markets are buoyant. And yet, the <strong data-start="601" data-end="660">Rupee has crashed to an unprecedented ₹90 per US dollar</strong>, marking one of the sharpest phases of depreciation in recent years.</p>
<p data-start="733" data-end="1240">This decline is not happening in a global vacuum. Ironically, the US economy&mdash;against whose currency the Rupee is weakening&mdash;is struggling with <strong data-start="875" data-end="896">high unemployment</strong>, <strong data-start="898" data-end="922">near-stagnant growth</strong>, and <strong data-start="928" data-end="959">internal tariff distortions</strong> that have disrupted its manufacturing and consumer sectors. Under normal economic logic, a weakening American economy should soften the Dollar. Instead, the Dollar remains aggressively strong, exposing the vulnerabilities of emerging market currencies&mdash;especially the Indian Rupee.</p>
<p data-start="1242" data-end="1814">This is precisely why today&rsquo;s political silence becomes even more noticeable. A decade ago, when the Rupee fell sharply during the UPA era, then&ndash;Prime Ministerial candidate <strong data-start="1415" data-end="1469">Narendra Modi mocked Dr Manmohan Singh mercilessly</strong>. Every dip in the Rupee was turned into a political jibe, every fluctuation a weapon to demonstrate alleged mismanagement. Today, with the Rupee breaching <strong data-start="1625" data-end="1632">₹90</strong>, the silence from the same leadership is deafening. The mocking has evaporated, replaced with technical explanations and shifting blame&mdash;something Modi never offered his predecessor.</p>
<p data-start="1816" data-end="1884">Economically, several structural realities explain the Rupee&rsquo;s fall:</p>
<h3 data-start="1886" data-end="1946"><strong data-start="1890" data-end="1944">1. Speculators and Importers Driving Dollar Demand</strong></h3>
<p data-start="1947" data-end="2201">Market behaviour has worsened the Rupee slide. Speculators are building strong Dollar positions, sensing volatility. Importers, wary of further depreciation, are aggressively hedging. This frontloading of Dollar demand exerts immediate downward pressure.</p>
<h3 data-start="2203" data-end="2249"><strong data-start="2207" data-end="2247">2. Delays in the India&ndash;US Trade Deal</strong></h3>
<p data-start="2250" data-end="2471">The prolonged absence of a trade settlement has created uncertainty in currency markets. With no clear signals on tariff structures, digital trade, and market access, the Rupee becomes vulnerable to global risk-off moods.</p>
<h3 data-start="2473" data-end="2510"><strong data-start="2477" data-end="2508">3. Persistent Trade Deficit</strong></h3>
<p data-start="2511" data-end="2773">India continues to import far more than it exports. With exports shrinking <strong data-start="2586" data-end="2615">for 13 consecutive months</strong>, falling by <strong data-start="2628" data-end="2638">14.75%</strong>, while imports dropped only <strong data-start="2667" data-end="2676">3.88%</strong>, the trade deficit has widened to <strong data-start="2711" data-end="2728">$11.6 billion</strong>. This fundamentally pushes up Dollar demand.</p>
<h3 data-start="2775" data-end="2810"><strong data-start="2779" data-end="2808">4. Inflation Differential</strong></h3>
<p data-start="2811" data-end="2978">India&rsquo;s inflation remains structurally higher than that of the US, steadily eroding the Rupee&rsquo;s purchasing power. Over time, this inflation gap forces the Rupee lower.</p>
<h3 data-start="2980" data-end="3039"><strong data-start="2984" data-end="3037">5. Non-Deliverable Forwards (NDF) Market Pressure</strong></h3>
<p data-start="3040" data-end="3132">As NDF contracts mature, there is sudden dollar buying, adding to the short-term volatility.</p>
<h3 data-start="3134" data-end="3173"><strong data-start="3138" data-end="3171">6. Balance of Payments Stress</strong></h3>
<p data-start="3174" data-end="3334">Despite strong forex reserves, India&rsquo;s BoP position has weakened because of higher import bills, global commodity prices, and uneven foreign investment inflows.</p>
<h3 data-start="3336" data-end="3369"><strong data-start="3340" data-end="3367">7. RBI&rsquo;s Defensive Role</strong></h3>
<p data-start="3370" data-end="3517">The central bank has been forced into regular intervention to prevent a deeper fall. Without its support, the Rupee would already be far below ₹90.</p>
<p data-start="3519" data-end="3892">All of this brings us back to politics. If a rising GDP, booming markets, increasing consumption, and strong services fail to stabilise the currency, then it is time for the government to confront structural weaknesses rather than hide behind rhetoric. And it is time for Prime Minister Modi to acknowledge the contradiction between his past criticisms and today&rsquo;s reality.</p>
<p data-start="3894" data-end="3970">A mature democracy deserves economic honesty&mdash;not selective political memory.</p>

A booming GDP, rising consumption and services strength still fail to prevent the Rupee’s fall

Why Is a Strong India Facing a Weak Rupee?

A booming GDP, rising consumption and services strength still fail to prevent the Rupee’s fall

December 3, 2025 | 20:15 IST