Sliding Rupee Risks Imported Inflation, Says Economic Survey; Global Prices May Limit Impact

• The Economic Survey warns that a depreciating rupee could lead to imported inflation, but expects soft global commodity prices to mitigate the effect.
• The rupee hit a new low of 92.0163 against the US dollar on January 29, the day the survey was tabled by Finance Minister Nirmala Sitharaman.
• Pressure on the rupee stems from US tariffs on India, foreign investor equity dumping, delayed India-US trade deal, and rising Japanese bond yields.
• Despite the pressure, the Reserve Bank of India's intervention to protect the currency from sharp depreciation has been limited.
• The survey projects India's inflation (headline and core) to be higher in FY27 than in FY26, contrasting with RBI's revised lower projections for FY26.

Why It Matters: A weakening rupee threatens imported inflation, though soft global commodity prices are expected to temper its severity.