The Indian Rupee’s journey to its latest lifetime low of Rs 86.50 against the US dollar has been met with predictable handwringing, memes, and armchair commentary. Social media pundits quip about the Reserve Bank of India (RBI) being on holiday, but the reality is more nuanced. The RBI’s careful interventions have, in fact, kept the rupee’s descent orderly, avoiding panic and chaos.

Yet, as the dollar flexes its muscles and global volatility tightens its grip, it may be time for the central bank to ease its reins and allow the rupee to depreciate further.

This is not a critique of the RBI’s efforts. The central bank has been walking a tightrope, balancing inflation, forex stability, and the need to protect India’s growth engine. Selling dollars to limit the rupee’s slide, tweaking the CRR, and raising ceilings on FCNR deposits are tactical moves in a broader strategy. But the question now is whether clinging too tightly to the rupee’s strength might do more harm than good.

A Dollar on Steroids

The dollar’s meteoric rise stems from a confluence of factors: the US economy’s surprising resilience, reduced expectations of Federal Reserve rate cuts, and Trump 2.0’s corporate tax cuts and global trade face-offs through tariff escalations. Add to this the attractiveness of high US Treasury yields, which move capital away from emerging markets, and you have a perfect storm.

While Asian peers like the Thai baht........

© Free Press Journal