Arresting rupee’s long decline

India’s rupee has weakened by nearly 6 units against the US dollar since March 2026, driven by rising oil prices and foreign investor withdrawals, though recent oil price drops below $85 a barrel may ease pressure temporarily. The currency’s short-term fluctuations often dominate headlines, but its long-term decline—from Rs 23 per dollar in 1991 to nearly Rs 95 today—poses deeper economic risks, including higher import costs for oil, electronics, and machinery. A weaker rupee increases inflation and reduces purchasing power, particularly for low-income households, while also raising the cost of foreign debt and straining government finances. Contrary to common assumptions, exporters rarely benefit from a weaker currency due to foreign buyers negotiating lower dollar prices for goods. The Reserve Bank of India (RBI) may intervene with dollar sales and policy adjustments, but lasting stability requires broader reforms. The article outlines six key actions to address the issue. First, India should secure stable crude oil supplies by signing long-term agreements with reliable partners like Russia, building strategic reserves, and expanding domestic oil and gas exploration, despite US sanctions pressure. About 50% of India’s oil imports pass through the conflict-prone Strait of Hormuz, and nearly 30% came from Russia last year, leaving the economy vulnerable to disruptions. Second, India must boost manufacturing in sectors like electronics, machinery, and energy equipment to reduce its $775 billion merchandise import bill in FY26, which is expected to rise further this year. Expanding exports from $445 billion to $800 billion could balance trade deficits and improve economic stability. However, India must improve ease of doing business by lowering financing and logistics costs, reducing regulatory delays, and ensuring a transparent policy environment to attract global investment. The article also emphasizes the need for investments in artificial intelligence infrastructure, semiconductors, and deep-tech innovation to enhance competitiveness. Without these structural changes, the rupee’s long-term decline will continue to undermine economic growth and investor confidence.