KUWAIT CITY, June 17: During the 1990s, 1 Kuwaiti Dinar was equal to ₹13–14 (₹17.90 to 1 US Dollar), reflecting the peg behavior of both currencies against the dollar and the gradual depreciation of the rupee. In the year 2000 Indian Rupee was ₹44.94 to a Dollar, in the next 10 years, by 2010 ₹45.73/per 1 Dollar. In the next 5 years by 2015, it was ₹64.15/per 1 Dollar, and after 10 years in 2025, today it is ₹86.10 per US Dollar ( 1 KD = ₹ 281.3)
Falling Rupee Boosts NRI Remittances
As the Indian rupee continues to weaken, Non-Resident Indians (NRIs) in Kuwait are seizing the opportunity to send more money home. With exchange rates crossing over ₹280 per Kuwaiti Dinar, remittance volumes have surged, offering better value for NRIs and boosting family support and investments in India.
The Indian Rupee (INR) has experienced a steady decline against the US Dollar since 2012, influenced by a combination of global economic factors and domestic challenges.
What’s Driving the Indian Rupee’s Decline?
Trade Deficit: India's persistent trade deficit, currently, India is importing more than it exports, increasing the demand for foreign currencies to pay for imports, thereby weakening the INR.
Capital Outflows: Foreign Institutional Investors (FIIs) have periodically withdrawn investments from Indian markets, driven by factors such as global economic uncertainties and more attractive returns elsewhere. These outflows reduce demand for the INR, contributing to its depreciation.
Economic Reforms and Growth Concerns: Domestic policy measures, including demonetization in 2016, have impacted economic activity and investor confidence. Additionally, concerns over economic growth have affected the attractiveness of Indian assets, influencing the INR's value.
Rising Crude Oil Prices: India's heavy dependence on oil imports means that fluctuations in global oil prices directly impact the country's trade balance and currency value. Periods of rising oil prices have led to increased demand for foreign currency, exerting downward pressure on the INR.
US Federal Reserve Interest Rate Hikes: Increases in US interest rates attract global capital towards the US, leading to capital outflows from emerging markets like India. This shift results in reduced demand for the INR and contributes to its depreciation.
Geopolitical Tensions: Events such as the Russia-Ukraine conflict have led to increased global risk aversion, prompting investors to seek safer assets like the US Dollar. This behavior has further weakened the INR.
Analysts suggest that the INR's depreciation may continue if global economic uncertainties persist and domestic economic challenges remain unaddressed. Factors such as oil price volatility, global interest rate trends, and domestic economic policies will play crucial roles in determining the future trajectory of the INR
The Indian Rupee's ongoing depreciation is a complex issue influenced by a combination of global economic dynamics and domestic economic policies. Addressing these challenges requires coordinated efforts both within India and in the context of the global economic environment.
