The depreciation in the value of the Indian rupee in 2025 is significantly being impacted by the shifts in Reserve Bank of India's (RBI) policy for currency management, according to a report by the Union Bank of India.
A depreciation in the Indian rupee's value was attributed to a shift in policy by the RBI, a report has claimed. (PTI)
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In the first two months of 2025, the rupee's value against the US dollar has dipped more than half of the total depreciation that the currency saw in the whole of 2024.
It has fallen 1.8% so far in 2025 against the US dollar. This compares to a 1.5% dip in its value in the whole of 2023 and a 3% dip in its strength in the whole of 2024.
The report noted that the change in stance is largely due to RBI Governor Sanjay Malhotra's statement that the central bank is open to more flexibility in the price of the rupee and will allow it to move freely in coordination with its local peers.
Malhotra's predecessor, Shaktikanta Das, whose tenure as RBI Governor ended on December 10 last year, favoured a “very stable rupee against the US dollar”.
This difference in the approaches of the two successive Governors is “also putting pressure on rupee”, the report added.
Moreover, US President Donald Trump's tariffs and the resultant trade wars and concerns that have emerged globally have had a bearing on the value of not only the Indian rupee but also other Asian currencies.
Since taking office, US President Donald Trump has made several trade tariff announcements.
His first move was a 25% tariff on goods from Canada and Mexico, which was delayed by 30 days but still led the rupee to cross the 87.00 mark on February 3.
As of FY 2023-24, the United States is India's largest export destination, with Indian exports to the US totaling $88.02 billion, making up 17.73% of India's total exports.
Any restrictions or new tariffs could impact Indian trade and further pressure the rupee.
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Home/Business/Shift in policy after Sanjay Malhotra became RBI Governor has led to weakening of Indian rupee: Report
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