Rupee Falls Past 85/$ For The First Time Ever: A New Low for Modinomics

The Indian Rupee has plummeted past 85 against the US Dollar for the first time in history, a significant milestone reflecting the challenges of the economic framework colloquially known as 'Modinomics'. On June 1, 2014, when Narendra Modi first assumed office, the Rupee was trading at approximately 59.19 per US Dollar, illustrating a stark depreciation over the decade.

This recent fall to below 85 per dollar was triggered by a combination of factors, including the US Federal Reserve's cautious approach to rate cuts, which has bolstered the US Dollar globally. The Fed's decision to signal fewer rate reductions in 2025 has led to a broad dollar rally, impacting currencies worldwide, including the Rupee.

India's own economic indicators have contributed to this depreciation. The trade deficit widened to an all-time high due to record gold imports in November, alongside a deceleration in economic growth, which has put additional pressure on the Rupee. The Reserve Bank of India (RBI) has been actively intervening in the currency markets, but the effectiveness of these measures is now under scrutiny as the Rupee continues to weaken.

Critics argue that this currency depreciation is a direct reflection on the policies of the Modi government, often termed 'Modinomics', which promised robust economic growth and stability. The decline has raised concerns about inflation, import costs, and the broader economic implications for an import-dependent economy like India.

On the other hand, some analysts suggest that a weaker Rupee might have its benefits by making Indian exports cheaper and potentially boosting domestic manufacturing, aligning with initiatives like 'Make in India'. However, the immediate impact seems to be escalating costs for importers, which could lead to higher prices for consumers if not managed carefully.

The debate now centers around whether this economic trend will influence political outcomes or if there will be a policy shift to address the Rupee's slide. The choice, as some on social media platforms have humorously suggested, appears to be between the fall of the Rupee or the fall of Modi, though such rhetoric oversimplifies the complex interplay of global economics and domestic policy.
As India navigates this economic crossroads, all eyes are on the government's next moves in monetary policy, fiscal strategy, and foreign exchange management to stabilize the Rupee and bolster the economy.