As the indian rupee slipped 3 paise to 86.65 against the U.S. dollar ahead of the Economic survey 2024-25, one might wonder: is this a routine market fluctuation, or is the currency signaling broader concerns before the Union Budget?
A Pattern Before Budgets?
Historically, the rupee often weakens in the days leading up to the Budget presentation. This happens for multiple reasons: investor uncertainty, speculative trading, and expectations of potential fiscal slippage. Foreign investors tend to adjust their positions, leading to fluctuations in the forex market.
For instance, in 2023, the rupee saw mild depreciation in the pre-budget phase before stabilizing post-announcement. Similar trends were observed in previous years, indicating that the market often anticipates fiscal announcements with caution.
Should We Worry?
A minor depreciation of 3 paise isn’t alarming in itself, but the context matters. India’s current account deficit, external debt, and foreign exchange reserves all play a role in shaping rupee movement. If the upcoming Budget signals expansionary spending without clear revenue-generation strategies, the rupee could come under further pressure. However, if the government reassures investors with fiscal discipline, the currency might recover.
Looking Ahead
With the Economic survey set to be unveiled today, traders and economists will be closely watching its take on growth projections, inflation, and fiscal management. The Budget on february 1 will ultimately decide whether the rupee stabilizes or faces further headwinds.
For now, this dip remains a minor tremor in the financial landscape, but it serves as a reminder that global and domestic factors will continue to shape the rupee’s journey in 2025.
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