By:- Mr. Sachin Sawrikar Managing Partner, of the Rs 9000 crore Artha Bharat Investment Managers IFSC LLP
“The movement of the Indian Rupee must be viewed in the context of global dollar strength, evolving macroeconomic conditions, and movements in crude oil prices. For an oil importing economy like India, a sustained rise in oil prices adds pressure on the trade balance and the currency. Some degree of depreciation is not unusual in an interconnected financial system; what is critical is that the adjustment remains orderly and grounded in fundamentals.A calibrated depreciation can support export competitiveness and assist in correcting external imbalances. However, sharp or persistent weakness carries risks. It can elevate imported inflation, widen the current account deficit, increase the burden of external debt servicing, and amplify the impact of higher energy costs.
For foreign investors, currency volatility directly affects dollar adjusted returns. If depreciation outpaces yield differentials, it may deter portfolio inflows and potentially trigger FPI outflows.”