The Indian rupee is depreciating because higher interest rates in developed economies are driving persistent foreign portfolio investor outflows, increasing dollar demand and reducing capital inflows into India.

CURRENT STATE

This is causing sustained rupee depreciation, with a 4.12% decline over the past year and a nearly 3% drop between December 31, 2024, and September 12, 2025. Foreign investors have withdrawn roughly $1.6 billion from Indian equities, pressuring the currency despite India's 7.6% GDP growth.

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