Indian Economy Grows While Rupee Continues to Lose Value

Although the Indian economy is recording rapid growth, the country's currency, the rupee, has continued to lose value every year since 2018. High inflation, energy costs, and capital outflows by foreign investors are creating pressure on the exchange rate.

The Dollar Exchange Rate and Causes of Depreciation

As pressures on the Indian currency continue, the dollar/rupee exchange rate reached 95.21 as of October 13, 2026. US customs tariffs and increases in oil prices have accelerated the losses.

Capital Outflows by Foreign Investors

Since the beginning of the year, foreign investors have sold over 30 billion dollars worth of stocks on the Indian stock market. Capital outflows and the increased demand for dollars for energy imports were among the main factors in the decline of the rupee.

Interventions by the Central Bank and Reserves

The Reserve Bank of India sold dollars from its foreign exchange reserves, raised interest rates, and tightened rules to support the rupee. Although foreign exchange reserves reached approximately 800 billion dollars in September, the measures taken could not stop the long-term decline.

Energy Imports and Future Expectations

The country's dependence on energy imports leads to rising oil prices increasing the demand for foreign currency. Reserve Bank Governor Sanjay Malhotra had stated that an annual depreciation of the rupee of about 3 percent due to the high inflation differential could be considered natural.