Why a falling rupee should worry us
With banks struggling to raise lending, a weaker rupee-dollar exchange rate might deter firms from borrowing abroad
Mumbai: The Indian rupee has been one of the worst performing major emerging market (EM) currencies in 2018, and the worst in Asia-Pacific. A Mint analysis shows that the rupee’s troubles can be traced back to concerns about India’s rising current account deficit. Given that the current account deficit is likely to remain under pressure, the rupee is likely to remain weak for some time, raising external funding costs for Indian firms even as it feeds into domestic inflation.