The Indian Rupee weakened against the US dollar as sustained capital outflows continued to impact the currency markets. Investor sentiment has been affected by increasing global economic uncertainty and risk aversion, prompting them to move capital away from emerging markets like India.

Factors Contributing to Rupee Depreciation

• Global Economic Slowdown: Concerns about a potential global recession are driving investors towards safer assets.
• Capital Outflows: Foreign institutional investors (FIIs) have been net sellers in the Indian equity market, leading to a decrease in demand for the Rupee.
• Increased Import Demand: Higher oil prices and import requirements are further straining the Rupee.

Impact on the Indian Economy

A weaker Rupee can have several implications for the Indian economy, including:

• Increased Import Costs: This could lead to higher inflation as imported goods become more expensive.
• Boost to Exports: A weaker Rupee can make Indian exports more competitive in the global market.
• Impact on Foreign Debt: A weaker Rupee increases the burden of servicing foreign debt.

The Reserve Bank of India (RBI) is closely monitoring the situation and may intervene in the currency market to stabilize the Rupee if necessary.