Opinion For a stronger rupee, India needs to close trade deals

On Thursday, India’s Chief Economic Adviser V Anantha Nageswaran provided a ray of hope for Indian exporters when he said that the additional US tariffs of 25 per cent on India levied over the purchase of Russian oil are not likely to continue beyond November 30. His statement is, of course, not based on an official communication, but Nageswaran seems to have drawn his conclusion on the talks held earlier this week between the US and Indian negotiators in New Delhi. As things stand, India faces 50 per cent tariffs from the US, a key trade partner for India, one with which India enjoys an over $40 billion trade surplus. Notwithstanding his good personal relations with Indian Prime Minister Narendra Modi, US President Donald Trump has often described India as one of the most protected countries when it comes to trade. The strain of ever-increasing tariffs throughout the year pushed the Indian currency to fall to an all-time of 88.44 to a dollar on September 11.

The fall last week was not sudden, but a part of a steady slide in the rupee’s value against the dollar in recent times. Just since the start of 2025, the rupee has lost almost 3 per cent of its value against the dollar. What makes this situation worse is that the currencies of almost all of the countries India competes with have actually strengthened significantly. For instance, the euro has gained 12 per cent over the dollar, the British pound (notwithstanding its own economic woes) has gained almost 8 per cent, and the Japanese yen has gone up by over 6 per cent. Economies considered most comparable with India, too, have gained substantially against the dollar. Brazil’s real is up almost 16 per cent against the dollar, the South African rand is up over 7 per cent, while the Chinese yuan is up 2.5 per cent. In other words, a wide gap seems to be emerging between the value of the rupee and the other currencies as well.

Advertisement

For a country that heavily imports essential goods like energy, a weaker currency can upset several equations (including government finances) and fuel inflation in the economy. Of course, there is a silver lining in that a weaker rupee may help Indian exporters push their goods in global markets at a time when most economies are starting to turn away from trade. Since US tariffs are a big reason, possibly the biggest one, for the slide in the value of the rupee, Nageswaran’s statement provides hope. The sooner India concludes trade deals with the US and other partners, the better it is for the rupee’s international standing.