“Indian Rupee depreciating against US Dollar” The Finance Minister of India said this in the Lok Sabha in July and this statement weighs more than it sounds. It is showing its vicious effect everywhere around us,already. Exactly, “Prices are skyrocketing!" and changes in Bank Rates are not to be ignored, though it is a preventive measure but only to curb the increasing price. This has been the scenario since the beginning of the year itself and 7% value is already lost from the Indian Rupee. Our Forex Reserves are being exhausted extensively. On 26 August,2022 it stood at $561.05 billion and continues to decline still.

The reasons are so obvious at the geopolitical and economic front that it speaks out for itself. The “black swan events” as quoted by Shaktikanta Das, Governor,RBI, contribute to it. They are the global pandemic COVID 19 and the unforeseen Russia-Ukraine war and much more small events in domestic fronts as well. The shock of COVID pandemic was still being covered, we began to struggle with power possessions between Russia and Ukraine. The sanctions on Russia has put a lot of pressure on all the economies as well as on India and these causes have been highlighted in newspapers now and then. The oil prices have soared high to $100 per barrel. It is affecting India so adversely because 80% of India's crude oil is imported. One big reason for rupee to depreciate is, also, the increasing rates by the FED (US Central Bank) which was a reflex action to the increasing inflation and their decision to follow hawkish monetary policy to help their economy recover. This has left the Rupee in a bad position as foreign investments are being taken away more aggressively. The data shows that $28.4 bn FDIs have been pulled out from the Indian market in 2022. surpassing the $11.08 bn sell off during the Financial crisis of 2008. This puts a lot of burden on the rupee and in the process to cover this, the rupee tends to slip. Being positive about conditions , “its(the rupee) resilient yet” says the Finance Minister. But the IMF showed no sign of mercy and anticipated that by 2029, the Indian rupee may have lost its value past the threshold of 94 rupees to a dollar (source: indiatimes.com). Common man can just sit back and cross fingers, hoping for better.

Undoubtedly, exports are benefited by depreciation of home currency but still India relies more on exports than imports. Exports being $37.9bn and imports being $187.07bn. So, its a clear picture of demerits more than merit.

Many higher officials in Ministry give an statement as “rupee is in a better position with other currencies, not like Pound Sterling etc.” but it is in worse condition still and its hurting the economy with prevalent effects. But better can be expected in future. Time and then we see the rupee coiling back at ease and being an optimistic is the need of this hour.

Suggestions to RBI regarding its policy towards rupee and its condition can be allowing it to freely hang and adjust itself to the new circumstances and to act as macro stabilizer to function of the policy reaction as the conditions will surely be better in times to come. But the Central Bank's interference should be there if the “new circumstances” get out of hand and do not knuckle down at our good. (data sources: The Hindu, Economic Times, IMF blog, indiatimes.com)