Over the decades, India has experienced several bouts of a steep decline in the rupee.

In most of these episodes, the immediate triggers have been largely external to the country. Some of them have centred around financial market stress – the global financial crisis of 2008 and the taper tantrum of 2013 – others around dislocations in energy markets – the price shocks following the Russia-Ukraine conflict and the recent war in West Asia.

Alongside these external shocks, domestic factors such high inflation and a persistent current account deficit are some of the reasons put forth to explain the currency’s depreciating bias. But, now, other factors appear to be weighing more heavily on the almost unidirectional movement of the rupee.

Consider the currency’s movements last year.

Between January to December 2025, the US dollar had weakened considerably. The dollar index – which measures the greenback’s strength against a basket of six currencies – fell from 108.09 to 98.25. But, rather than strengthening, the rupee weakened from 85.70 to 89.91 against the dollar.

The rupee was then in a minority. Currencies of both........

© Indian Express