Paper Contents
Abstract
This study analyzes the devaluation of the Indian Rupee (INR) against the US Dollar (USD) over the period of the last ten years (2014-2024). It examines the key economic factors contributing to this trend, including macroeconomic indicators, global financial market dynamics, and domestic policy decisions. The research investigates the interplay of factors such as inflation rates in India and the United States, interest rate differentials, current account deficits, foreign institutional investor (FII) flows, and global risk sentiment. The study employs statistical analysis of exchange rate data, alongside qualitative assessment of policy pronouncements and economic reports. The findings reveal a persistent depreciatory pressure on the INR, characterized by significant volatility and cyclical fluctuations. The depreciation of the Rupee can be attributed to a complex interplay of factors. Stronger US economic growth, coupled with the Federal Reserve's monetary policy decisions (including interest rate hikes and quantitative tightening), has led to a stronger USD, creating headwinds for emerging market currencies like the INR. Furthermore, India's relatively higher inflation compared to the US, and persistent current account deficits, have also contributed to the weakening of the Rupee. The study also explores the impact of global events, such as geopolitical tensions and commodity price fluctuations, on the INR-USD exchange rate. Finally, the study provides a comprehensive overview of the strategies used by the Reserve Bank of India to manage the volatility and mitigate the adverse effects of the Rupee's depreciation, assessing their effectiveness over the period. The abstract provides a brief overview of the factors contributing to Rupee devaluation in the past 10 years and provides future insights for the economic and financial outlook of India.
Copyright
Copyright © 2025 Niharika Arora. This is an open access article distributed under the Creative Commons Attribution License.
