The rupee’s exchange rate against the US dollar crossing the 90 mark this week may have grabbed considerable attention, but the underlying dynamics have been playing out for quite some time now. With plenty of uncertainty around geopolitical and trade, the Reserve Bank of India (RBI) intervened heavily – until it didn’t, or at least stepped back somewhat.

After breaching the 80-per-dollar mark in July 2022 following the supply chain shock caused by Russia’s invasion of Ukraine earlier that year in February, the rupee’s exchange rate has moved south pretty quickly, taking just three-and-a-half years to hit 90. This has occurred despite India’s current account balance easing sharply from a deficit of $31 billion in July-September 2022 to even being in surplus for a couple of quarters.

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