Rupee Faces Political Heat as It Approaches 90 Against Dollar

The rupee's significant drop against the US dollar has spurred a political backlash, with Congress leaders recalling Prime Minister Narendra Modi's previous criticism of currency depreciation from a decade ago. The Indian currency started at 89.46 to the dollar but managed to slightly recover, trading at 89.17, just days after suffering its largest decline in over three years.

On Friday, the rupee fell sharply by 98 paise, closing at a record low of 89.66 due to heightened demand for the US dollar and considerable selling pressure. Uncertainties tied to trade and a general risk-off sentiment have continued to impact the rupee's value, bringing it alarmingly close to the 90 mark.

With the start of the week, Congress general secretary Jairam Ramesh criticized the government on X, indicating that the rupee was in a “free fall” and nearing the critical 90 rupee threshold against the dollar. He also revived a 2013 video showing Modi, then Gujarat's chief minister, deriding the UPA government during a similar currency crisis, stating it appeared there was a “competition” between the falling rupee and the government's “dignity”.

This latest downturn has compounded the volatile economic scene, marking the rupee's decline of 98 paise as the sharpest since February 24, 2022, when it dropped by 99 paise. Analysts suggest that ongoing global uncertainties and rising demand from importers for dollars have primarily driven the rupee's decline, while domestic equity markets are also experiencing investor selling pressure.

The ensuing political dialogue has intensified the economic discussion, placing the rupee's future firmly in the spotlight as markets brace for more volatility.