Rupee is above 91 now. That’s a level people do notice, even if they don’t actively track currencies every day.
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Amrit Kaal
Fastest economy and zero inflation. Yeah Right…
Spot-checked a few of the other currencies in the above chart (eg. USDBRL).
They appear to have been at their weakest earlier in the year
i.e. the start of 2025 which is being used as the base/reference in the above chart.
Is this a sign of INR having managed to counter the forex pressure for almost an year
and
- finally no longer being able to do so now?
or - is this an instance of deliberately allowing this now in a controlled manner?
In this context, inflation would be a trailing indicator, right?
(costlier imports leading to costlier goods and services (inflation) with a lag the size of some processing time.)
Can low inflation and a weakening rupee, both be true simultaneously?
- Have we been less reliant of imports for the large part of this year 2025?
- Specifically USD-denominated exports?
Along the same lines, simply from a weakening rupee,
can we expect higher inflation in the coming quarter?
(or any other factors stand to counter-act the impact of a weaker rupee?)
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Not really. Inflation can both cause and result from home currency depreciation. It’s a vicious downward spiral.
if things are good, money pours in. If things are bad, money leaves. Money leaving depreciates home currency. In fact, if government prints another near zero inflation, you can be sure the numbers are cooked… probably trying to deceive trump for a deal or voters for elections. If you do it too much, it’ll be like the story of the boy who cried wolf. No one would believe you:
Facts:
- Excellent trade data released yesterday had no effect on rupee.
- They’re trying to use this data as leverage for Trump talks
Reading between the lines, as I’ve said before, they’re trying to cook the books for leverage against trump, but market is not buying it and trump may not either. On the other hand, I wonder if US can or is purposely depreciating rupee to force India for a better trade deal. Either way, the lost purchasing power is forever lost for the common man.
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This might sound like a conspiracy theory, but my feeling is that - govt is letting rupee fall so that imports get costlier, and the taxes on them would increase.
Just like OnePlus launched a new phone few weeks back, it was priced about 45k INR at China price, but coming to India it grew to 75k with currency exchange and taxes. 18% taxes on imports, and majority of imports is electronics. So let rupee fall, and imports become expensive. Consumer pays more, and govt gets more taxes.
Sounds very basic reason to let rupee fall, but seems the main reason to me - let rupee fall, imports become expensive, tax revenue increases, Consumer loses (who cares though - right!), govt gets more to fund lifestyle of baabus.
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Feels like they’re just letting it drift a bit now. They held it steady for a long time, you can’t keep pushing against the global dollar forever, and this move made it look like a sudden shocker.
It is not the only reason, but it is a side benefit the government is unlikely to mind while letting the rupee adjust.
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Obviously but that is a big reason. They dont care about the consumers.
They can’t do that. if left unchecked, it’ll cause a vicious downward spiral and huge inflation… The inflation right now is not visible, so much so that the government can fudge the books and get away with it. The common man doesn’t know he’s being robbed in broad daylight, because the fall per day is small enough to not be perceivable, especially the poor… It’s a indirect tax on the poor to give to the rich. A tax on the savers to give to the borrowers. if let to fall freely, inflation would be palpable among the voters… fuel price increases, electricity power cuts… queues for food… It’ll cause social unrest and riots… People in power will be forced to resign. Take Srilanka for example. That’s why RBI is regularly stepping in selling dollars to prevent faster than perceivable inflation… to make up for the government’s mishaps… at least temporarily. It’s in the government’s best interest to prevent rupee fall. If it falls, it’s because they are unable to control it.