Indian Rupee Weakens Every Year Since 2018 Amid External Pressures

Indian Rupee: The Indian rupee is India's national currency, traded internationally against currencies such as the US dollar. In the reported episode, it is under sustained depreciation pressure from external shocks, including stronger dollar demand, elevated oil costs, foreign outflows, US tariffs, and the Iran conflict; the Reserve Bank of India has responded with market intervention and tighter foreign-exchange rules. RBI response: The Reserve Bank of India opened a special dollar window for state-owned oil companies and introduced additional cash-reserve and foreign-exchange derivative requirements to reduce pressure on the spot market. Market pressure: The rupee has approached record lows as elevated crude prices, stronger global yields, and persistent foreign-investor outflows increase demand for dollars. Policy tradeoff: The RBI has combined currency intervention with tighter monetary and market measures, but defending the rupee can draw down foreign-exchange reserves and may not eliminate the external pressures driving weakness.