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The rupee has been remarkably stable relative to many emerging-market currencies over the last two to three years, CEA Nageswaran said, adding that the government expects conditions to improve in 2026.
India’s Chief Economic Adviser V. Anantha Nageswaran on Wednesday said the government is not alarmed by the rupee’s sharp depreciation past the ₹90-per-dollar mark, adding that the currency’s weakness has not yet translated into higher inflation or hurt export competitiveness.
Speaking at a CII event, Nageswaran said the rupee’s performance must be viewed against a global backdrop of rising US interest rates, geopolitical strains and tighter financial conditions. “The rupee has been remarkably stable relative to many emerging-market currencies over the last two to three years,” he said, adding that the government expects conditions to improve in 2026.
The rupee has slipped about 5% this year and hit a fresh intra-day low of ₹90.30 on Wednesday, pressured by foreign investor outflows and steady dollar demand from domestic banks. Analysts say the absence of progress on an India-US trade package and weakness in equities have added to the pressure.
Nageswaran linked the rupee’s recent volatility to shifts in global capital flows, noting that foreign direct investment patterns have undergone a structural change, with outbound investments by Indian companies rising in response to supply-chain localisation and strategic diversification.
“Gross FDI may cross $100 billion this year, but the nature of the terrain has shifted with respect to FDI. It has become a much harder terrain and we need to up our game in attracting investments,” CEA Nageswaran said while speaking on the need to push net FDI.
He added that while existing tax or regulatory frictions remain, they cannot fully explain the incremental challenges observed over the past two years. “Abrupt increase in interest rates in developed countries; localisation of supply chains is also one of the reasons that outbound FDI by Indian industry has gone up, and has altered the dynamics of net FDI. Industry has to be now present in the foreign markets,” he said.
Nageswaran stressed the need for a whole-of-government approach to strengthen India’s investment climate. “It is important to give confidence to foreign and domestic investors on easy methods of exit." He also said that legal, regulatory, tax and single-window issues need to be addressed.
(Edited by : Poonam Behura)
