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though the rupee is the most depreciated currency among select major economies, it is not the most volatile, says SBI Research in its report as the rupee falls below 90 vs dollar.
Rupee depreciates against the US dollar.
Even as the rupee on Thursday hit its fresh all-time low of 90.43, SBI Research said a falling rupee is not a weak rupee. It said that though the rupee is the most depreciated currency among select major economies, it is not the most volatile, and a high tariff of 50% imposed on India is one of the major factors behind the current phase.
It also said domestic resilience needs to be counterintuitive to exogenous forces.
“A sliding rupee is not necessarily a weak rupee, even as it breaches the psychological barrier of 90. Domestic resilience needs to be counterintuitive to exogenous forces. A rate cut may impinge upon market sentiments, although an inflation-targeting central bank’s responsibility is not currency management,” SBI Research said in its report.
‘Rupee One Of The Least Volatile Currencies’
According to the report since April 2, 2025, when the US announced sweeping tariff hikes across economies, the Indian rupee has depreciated by nearly 5.5% against the dollar (most amongst the major economies), notwithstanding sporadic phases of appreciation owing to optimism over positive, mutually beneficial conclusion.
“However, while INR is the most depreciated currency amidst select major economies, it is not the most volatile. Analysis of Coefficient of variation indicate that INR is one of the least volatile currencies since 02 Apr’25 (~1.7%). This clearly indicates that the high slab of 50% tariff imposed on India, substantially higher than peers like China (30%), Vietnam (20%), Indonesia (19%), and Japan (15%), is one of the major factors behind current phase, notwithstanding evident efforts on Indian exports diversification and FTAs though ~$45 billion worth of major Indian exports is expected to be impacted by US tariff, mostly in labour intensive areas,” SBI Research added.
Rupee’s Slide Quickest After Taper Tantrum
The rupee breached a psychologically important level of 90 today, the slide one of the quickest in recent times after the heady days of Taper Tantrum.
“The decline in the value of the currency is being driven to the edge by trifecta of limbos in US-India trade deal, FPI outflows, chiefly equities (after two years of robust inflows) and RBI’s clear stance of distancing itself from an ’interventionist regime’ while wagering all it takes on excessive volatility by traders, arbitrageurs and jobbers,” it added.
SBI Research also said the decline in value of the rupee as being ascertained by a section of the market to a negative trade data is not factually correct.
The 50% tariff imposed on India [which is also higher than those of other Asian countries such as China (30%), Vietnam (20%), Indonesia (19%), and Japan (15%)] is one of the major factors behind current phase of rupee depreciation. Despite diversification by Indian exporters, ~$45 billion worth of major Indian exports are expected to be impacted by US tariff, it added.
‘A Rate Cut Can Be Construed As Knee-Jerk Reaction To Protect Rupee’
SBI Research said any rate cut decision by the RBI MPC on Friday will be construed as a knee-jerk reaction to protect the rupee.
“With MPC scheduled to take a call on policy rate, a cut at this juncture can be construed as a knee jerk reaction to protect the rupee, which would be detrimental to an otherwise fairly resilient currency, riding the domestic vigour,” it added.
Click here to add News18 as your preferred news source on Google. December 04, 2025, 10:05 IST
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