Indian Economy: India’s economy is continuously progressing. For the last two consecutive quarters, GDP growth has outpaced the projections made for it, corporate companies are also earning handsomely and recently revealed data has also revealed that the country’s GDP grew at the rate of 8.2 percent in the second quarter of the financial year 2025-26, which is much more than 5.6 percent in the same quarter last year.
Global agencies also recognized India’s strength
Even the global agencies which had doubts about the pace of Indian economy have now accepted India’s strength. All this is happening, but the surprising thing is that still the rupee is falling. On Wednesday, the Indian rupee fell to a record low against the US dollar. For the first time one dollar has crossed 90 rupees. These two things are completely opposite to each other because GDP shows what is going on inside the country and currency shows what is India’s status in the outside world.
Relationship between growth and economy
Manoranjan Sharma, Chief Economist of Informix Ratings, says that the connection between growth and currency is beyond people’s understanding. He said that a strong economy helps the rupee, but this factor alone is not enough. Explaining this, he said, due to global capital flow, interest rate difference and geopolitical uncertainty, the rupee is falling and the demand for safe haven currency dollar is increasing. Dollar is called safe haven currency because it maintains stability in times of uncertainty in the global market.
He also said that India’s dependence on imported energy, electronics and gold, as well as inflation differentials with trading partners and a widening current account deficit are also putting pressure on the rupee. In such a situation, this thinking is old that if GDP strengthens, then the rupee will also automatically strengthen. There is no one-size-fits-all relationship between a strong economy and a strong currency. He also said that due to high interest rates in America, the exchange rate of rupee has declined, while imports have strengthened.
A major reason for the weakness of the rupee is the strength of the dollar. Since talks on a trade deal between the US and India are stuck, expectations regarding a Federal Reserve rate cut are constantly changing. Due to this, investors are investing their money back in dollars. And whenever this happens, currencies around the world weaken.
What next regarding rupee?
Will the rupee continue to fall further? Answering this question, Aastha Ahuja, Professor of Economics at Aryabhatta College, said, as long as uncertainty remains, nothing concrete can be said. After all, for how long will the Reserve Bank continue to sell dollars from its reserves to support the rupee? For the rupee to strengthen, it is important to have a trade deal as soon as possible because the trade deficit is also increasing. Because of this, the rupee has become one of the weakest currencies in Asia.
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