Rupee Decline Fuels Political Tensions as Currency Approaches 90 Mark

Post by : Bianca Suleiman

The recent decline of the rupee against the US dollar has reignited political tensions, with Congress referencing Prime Minister Narendra Modi’s past comments on currency depreciation. The rupee initially opened at 89.46 per dollar but showed slight recovery to 89.17, following a significant drop that marked its steepest fall in over three years.

On Friday, the rupee plunged 98 paise, closing at a record low of 89.66 amid strong demand for the US currency and increased selling in both local and international markets. Trade uncertainties and risk-averse behavior contributed to this downward trend, bringing the rupee perilously close to the 90 mark.

As the trading week commenced, Congress general secretary Jairam Ramesh criticized the government, tweeting that the rupee was in “free fall” and nearing the 90 rupees to the USD milestone. He shared a 2013 video of Modi, who at the time mocked the UPA government for a similar weakness in the rupee, suggesting a “competition” between the falling currency and the government’s “dignity.”

The rupee's recent drop has intensified concerns in an already unstable financial environment, with the one-day fall of 98 paise being the steepest since February 24, 2022. Analysts point to global uncertainties and a surge in dollar demand from importers as primary reasons, as investors continue to sell off domestic equities.

This political dispute adds complexity to the broader economic dialogue, catapulting the rupee’s path into the national discourse as markets prepare for potential further volatility.