ERD officials said past trends suggest that net portfolio inflows during CY07-CY14 averaged $162.8 billion, while portfolio inflows from CY15 to CY25 (*year to date) were much lower at $87.7 billion. | Photo credit: iStockphoto
The ERD officials also noted that the rupee (INR) is likely to exit the current depreciation regime and rebound sharply in the second half of the next fiscal.
They underlined that the RBI intervened an estimated $30 billion in the forex market during the June-October period to smooth out excessive and disruptive volatility in the Indian rupee exchange rate.
According to the officials, past trends indicate that net portfolio inflows during CY (calendar year) 07-CY14 averaged $162.8 billion, while portfolio inflows from CY15-CY25 (*till date) were much lower at $87.7 billion.
“The glut of portfolio inflows ahead of CY14 was the main reason for rupee moves… Such luxury is now absent as geopolitical uncertainties caused by the delay in the trade deal have been the main reason… India’s trade data shows its remarkable resilience in navigating prolonged uncertainty, increased protectionism and labor supply shocks,” the officials said.
Dollar, rupee falls
While the geopolitical risk index has moderated since April 2025, the current average value of the index for April-October 2025 is much higher than the 10-year average, indicating the pressure that global uncertainties are putting on the rupee, she added.
The ERD officials noted that from September 2024 to date, both the dollar and the rupee are depreciating. This simultaneous depreciation marks a distinct phase characterized by increased geopolitical uncertainty in the current global order.
They concluded that since April 2, 2025, when the US announced major tariff hikes across economies, the rupee has depreciated 5.7 percent against the dollar (the most among major economies), despite sporadic phases of appreciation due to optimism over the US-India trade deal. They emphasized that while the rupee is the most depreciated currency, it is not the most volatile.
This clearly indicates that the 50 percent tariff imposed on India is one of the major factors behind the current phase of rupee depreciation.
Published on December 17, 2025
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