Rupee slump forces India to rethink import strategy
What's the story
Union Minister Piyush Goyal has said that the Indian government is keeping a close eye on the rapidly depreciating rupee against the US dollar. He added that several measures are being considered to address the widening Current Account Deficit (CAD). The minister made these remarks while addressing reporters in Delhi on Thursday. "We are monitoring the situation. All the various arms of the government are working as a team," he said.
Economic indicators
India's CAD widens
India's CAD widened to $13.2 billion or 1.3% of GDP in the December quarter, from $11.3 billion a year ago. This was mainly due to a widening trade deficit on account of falling exports to the US, data from the Reserve Bank of India showed on March 2. The CAD is when a country's imports exceed its exports over a period of time.
Import surge
Surge in gold, silver imports
The surge in gold and silver imports is also contributing to the widening trade deficit and CAD. Gold imports surged 24% to a record $71.98 billion in 2025-26, while silver imports skyrocketed by about 150% to $12 billion in the last fiscal year. The government has raised import duty on these precious metals from 6% to 15%, hoping to curb their import and dollar outflow. With the 3% IGST included, the effective duty now stands at 18.45%.
Currency crisis
One of Asia's most stable currencies becomes worst performer
Once one of Asia's most stable currencies, the Indian rupee has become one of the worst-performing emerging market currencies this year. The depreciation is due to a combination of high oil prices, capital outflows, widening trade deficits and a strong US dollar. The rupee has fallen by some 7% in 2026 and is down about 6.1% since the Iran conflict began in late February.
External pressures
Iran-US tensions impact rupee
India imports over 88% of its crude oil requirements, with each rise in global oil prices directly increasing dollar demand. As peace talks between Iran and the US stall, rising crude prices are putting more pressure on the rupee. Further, Foreign Portfolio Investment (FPI) outflows amid rising geopolitical tensions are also adding to the rupee's weakness.