Rupee Set to Weaken Further Despite Narrower Current Account Deficit
· Business · Economic Times
The Indian rupee is expected to depreciate further despite a contraction in the current account deficit to around 0.5% of GDP from about 2.5% three years ago. Economists attribute the ongoing currency pressure to tighter global financial conditions and persistent foreign portfolio outflows. The rupee has fallen 5% this calendar year, ranking as the fourth-worst performing currency in Asia after the Indonesian rupiah. Sustained interventions by the Reserve Bank of India have been unable to fully offset these external pressures. Brent crude prices hovering near USD 105 a barrel further inflate India's import bill and exacerbate depreciation risks.
Why it matters
Persistent rupee depreciation increases import costs for crucial commodities like crude oil, raising inflationary pressures for Indian consumers and complicating foreign capital flows.
Read the original report — Economic Times
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