{"id":101385,"date":"2026-05-02T11:22:00","date_gmt":"2026-05-02T05:52:00","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=101385"},"modified":"2026-05-02T11:22:00","modified_gmt":"2026-05-02T05:52:00","slug":"rupee-under-pressure","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/rupee-under-pressure\/","title":{"rendered":"Rupee Under Pressure: Why Rupee Under Pressure Fragile Five Era Comparison Matters"},"content":{"rendered":"<h2><b>Rupee under Pressure Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Indian rupee has depreciated sharply, touching an <\/span><b>all-time low of \u20b995.33<\/b><span style=\"font-weight: 400;\"> against the US dollar on April 30, 2026, meaning it now takes over \u20b995 to buy one dollar.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This marks a steep decline compared to the beginning of 2026, when the exchange rate was around \u20b990 per dollar, and less than \u20b985 a year ago.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Overall, the rupee has <\/span><b>fallen by about 12%<\/b><span style=\"font-weight: 400;\"> in just <\/span><b>12 months<\/b><span style=\"font-weight: 400;\">, significantly higher than its typical annual depreciation of 3\u20134%.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The magnitude of this fall is reminiscent of the 2013 currency crisis, when the rupee similarly weakened by around 12% within a short span, indicating heightened pressure on the currency in recent times.<\/span><\/li>\n<\/ul>\n<h2><b>\u2018Fragile Five\u2019 Economies and Currency Depreciation<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In 2013, a leading global financial services firm Morgan Stanley identified five emerging market economies\u2014<\/span><b><i>India, Indonesia, Brazil, South Africa, and Turkey<\/i><\/b><span style=\"font-weight: 400;\">\u2014as the \u201cFragile Five\u201d due to their vulnerable currencies.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">During this period, their currencies saw <\/span><b>sharp declines against the US dollar<\/b><span style=\"font-weight: 400;\">, including the Indian rupee, Indonesian rupiah, Brazilian real, South African rand, and Turkish lira.<\/span><\/li>\n<\/ul>\n<h3><b>Role of US Monetary Policy\u00a0<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The primary trigger behind this depreciation was the rollback of Quantitative Easing (QE) by the Federal Reserve.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Under QE, low interest rates in the US encouraged investors to borrow cheaply in dollars and invest in higher-yielding emerging markets.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, when the US signalled tightening of monetary policy, capital flows reversed as investors shifted funds back to safer US assets like government bonds.<\/span><\/li>\n<\/ul>\n<h3><b>Underlying Structural Weakness<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">These economies were particularly affected because they ran current account deficits\u2014importing more than they exported\u2014and relied heavily on foreign capital inflows to finance this gap.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">When global investment flows reversed, the demand for their currencies fell sharply relative to the US dollar, leading to significant depreciation.<\/span><\/li>\n<\/ul>\n<h2><b>Rupee in 2026: Revisiting the \u2018Fragile Five\u2019 Comparison<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">While India has projected itself as a leading global economy, even reaching the top five in GDP rankings in recent years, recent trends show renewed pressure on the rupee.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Over the past 12 months, the Indian currency has depreciated by about 12.1% against the US dollar, making it the second-worst performer among the original \u201cFragile Five\u201d economies.<\/span><\/li>\n<\/ul>\n<h3><b>Comparative Performance of Other Economies<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Unlike 2013, the current scenario shows divergence among these economies.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Brazil and South Africa have witnessed currency appreciation\u2014around 12% and 10% respectively\u2014indicating stronger external positions or capital flows.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Indonesia has experienced only a modest depreciation of about 4%, suggesting relative stability.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Turkey remains the worst performer, with its currency\u2014the <\/span><b>lira<\/b><span style=\"font-weight: 400;\">\u2014falling by 17% in the past year.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">More significantly, the lira has undergone a prolonged crisis, losing over 1000% of its value since 2018, highlighting deep structural economic issues.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><b>Rupee Depreciation: Comparing 2026 with the 2013 Crisis<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The rupee\u2019s fall in 2026 closely mirrors the decline seen during the 2013 crisis in terms of scale.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It depreciated by about 9.6% in FY 2025\u201326, almost identical to the 9.5% fall recorded in FY 2013\u201314.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, a <\/span><b>key difference<\/b><span style=\"font-weight: 400;\"> lies in the trend: the 2013 decline came after consecutive sharp falls in the preceding two years (around 13% in FY12 and 6% in FY13), whereas the recent depreciation followed a period of relatively moderate currency movement.<\/span><\/li>\n<\/ul>\n<h3><b>Underlying External Sector Pressures<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The drivers of the current depreciation resemble those of 2013, particularly in terms of <\/span><b><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/balance-of-payments\/\" target=\"_blank\">balance of payments<\/a> stress<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Both periods witnessed a <\/span><b>widening current account deficit<\/b><span style=\"font-weight: 400;\">, indicating higher outflows on imports of goods and services.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">At the same time, the capital account also weakened, with reduced or negative inflows, reflecting capital outflows from the economy.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The simultaneous <\/span><span style=\"font-weight: 400;\">occurrence of deficits in both current and capital accounts created significant pressure on the rupee in both periods<\/span><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This meant that not only was India spending more foreign exchange on imports, but it was also losing capital to global markets, intensifying the currency\u2019s decline.<\/span><\/li>\n<\/ul>\n<h3><b>Role of Forex Reserves<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In such situations, the only buffer available is the drawdown of foreign exchange reserves.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As in 2013, India has had to rely on its reserves to manage the imbalance between inflows and outflows, highlighting the structural similarity between the two episodes despite differences in preceding trends.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/rupee-record-low-vs-dollar-2026-fragile-five-comparison-10665381\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Rupee under Pressure fragile five era comparison explains sharp depreciation, global capital outflows, and similarities between 2013 crisis and current currency trends in India.<\/p>\n","protected":false},"author":18,"featured_media":101412,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[60,7279,22,59],"class_list":{"0":"post-101385","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-mains-articles","9":"tag-rupee-under-pressure","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/101385","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=101385"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/101385\/revisions"}],"predecessor-version":[{"id":101405,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/101385\/revisions\/101405"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/101412"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=101385"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=101385"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=101385"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}