Rupee Weakness: Global Uncertainty, Capital Flows Drive Pressure, Aids Exports: CEA

• Chief Economic Adviser V Anantha Nageswaran stated that the rupee's recent weakness is due to global uncertainty and volatile capital flows, not solvable by short-term Budget measures.
• India's status as a capital-importing economy makes the rupee sensitive to global risk sentiment and geopolitical developments, making capital inflow certainty difficult.
• Nageswaran noted that a weaker rupee helps cushion the impact of higher global tariffs and supports India’s export sector, offsetting external economic headwinds.
• He cautioned against directly linking exchange-rate movements to Budget arithmetic, as currency dynamics do not translate one-to-one into fiscal numbers.
• A sustained improvement in currency outlook depends on a broader shift in global sentiment, potentially aided by a resolution of the tariff situation with the United States.

Why It Matters: Rupee's weakness is driven by global factors, aiding exports, with long-term stability tied to global sentiment shifts.