The Negative impact of the falling rupee on the economy

February 3, 2026

The value of the rupee is continuously falling against the dollar. In January alone, the rupee depreciated by 202 paise, or more than two percent, against the US dollar. As a result, foreign investors in India are continuously withdrawing their money. The picture is clear: the US dollar is steadily strengthening during Donald Trump’s presidency. This is why Trump keeps threatening us with increased tariffs.

The fall in the rupee’s value against the dollar directly impacts our imports because we have to pay more for the same quantity of goods. Yes, you could argue that the depreciation of the rupee against the US dollar provides some relief to our exporters because the US can now buy more goods from India. However, the increased value of the dollar is making our imports more expensive. Imports of crude oil, coal, plastic materials, chemicals, vegetable oils, fertilizers, machinery, gold, pearls, iron and steel, etc., have all become more expensive, leading to a slight increase in inflation in India.

The weakening of the rupee against the US dollar also puts a greater burden on Indian students who wish to study in the US. Studying abroad has become very expensive for Indian students. Now, parents have to spend more money to send their children abroad.

Similarly, if Indians want to travel abroad, they will have to pay more to buy US dollars. The continuous decline in the value of the rupee against the dollar is detrimental to the Indian economy. But what is the solution? The solution is to transform India from an import-dependent economy to an export-oriented economy. The more trade agreements we make with other countries, the less dependent we will be on the US dollar. We have already started on this path, so we need to accelerate our progress in this direction.

At the same time, the goal of self-reliance cannot be neglected. The more self-reliant we become in various sectors, the less we will need US imports. First and foremost, to achieve this self-reliance, India needs to discover more natural oil reserves within its own territory. We cannot meet the entire petroleum demand of the country with the limited oil reserves we currently have in India.