What is the story about?
The Indian rupee has depreciated by more than 6% against the US dollar since the beginning of 2025, Chief Economic Adviser (CEA) V Anantha Nageswaran said on Thursday (January 29), noting that while several emerging-market (EM) currencies have outperformed the rupee over the short term, the longer-term trend shows a similar weakening across most EM currencies.
Speaking on the rupee on the morning of the Economic Survey, Nageswaran said that when the time frame is extended to a six-year period beginning February 2020, most major emerging-market currencies, including the Indian rupee, have depreciated against the dollar by a comparable magnitude.
Nageswaran added that countries with current account deficits tend to remain vulnerable during periods of geopolitical disruption, as global capital flows become more sensitive to political and strategic developments.
The comments come amid heightened volatility in the currency market.
On Wednesday (January 28), the rupee depreciated 31 paise to close at 91.99 against the US dollar, marking its lowest closing level for the second time in less than a week. The currency had earlier touched an intraday high of 91.50 before slipping on month-end dollar demand and geopolitical concerns.
Market participants said the rupee initially benefited from a softer dollar index and improved global sentiment following progress on the India–European Union free trade agreement. However, importer demand for dollars and lingering global uncertainty reversed early gains.
The rupee’s weakness in 2025 reflects a broader pattern seen across emerging markets, where currencies faced pressure from sustained US dollar strength, volatile capital flows and geopolitical tensions.
Analysts note that the year saw sharp swings in the rupee, with risk-off episodes triggering outflows and pushing the currency closer to record lows, even as intermittent inflows and policy support helped limit deeper losses.
Despite near-term volatility, economists point out that the rupee’s movement over the past few years broadly mirrors that of several peer emerging-market currencies.
Speaking on the rupee on the morning of the Economic Survey, Nageswaran said that when the time frame is extended to a six-year period beginning February 2020, most major emerging-market currencies, including the Indian rupee, have depreciated against the dollar by a comparable magnitude.
Nageswaran added that countries with current account deficits tend to remain vulnerable during periods of geopolitical disruption, as global capital flows become more sensitive to political and strategic developments.
The comments come amid heightened volatility in the currency market.
On Wednesday (January 28), the rupee depreciated 31 paise to close at 91.99 against the US dollar, marking its lowest closing level for the second time in less than a week. The currency had earlier touched an intraday high of 91.50 before slipping on month-end dollar demand and geopolitical concerns.
Market participants said the rupee initially benefited from a softer dollar index and improved global sentiment following progress on the India–European Union free trade agreement. However, importer demand for dollars and lingering global uncertainty reversed early gains.
The rupee’s weakness in 2025 reflects a broader pattern seen across emerging markets, where currencies faced pressure from sustained US dollar strength, volatile capital flows and geopolitical tensions.
Analysts note that the year saw sharp swings in the rupee, with risk-off episodes triggering outflows and pushing the currency closer to record lows, even as intermittent inflows and policy support helped limit deeper losses.
Despite near-term volatility, economists point out that the rupee’s movement over the past few years broadly mirrors that of several peer emerging-market currencies.
