A weakening bias.

"Since India is a net importer of commodities, especially crude oil, a falling rupee would mean a wider trade deficit and a worsening current account deficit. As such, the Reserve Bank of India (RBI) has announced measures to curb the rupee's fall," wrote Harsha Jethmalani. "BofA Securities anticipates companies that have large foreign exchange liabilities to report significant mark-to-market losses." After the rupee fell past 80 to the dollar on 19 July, NDTV, the rupee has recovered its losses and is trading at 78.91 to one dollar this morning, xe.com. "Bangladesh is seeking a bailout from the International Monetary Fund; Pakistan is expected to receive its own $1.2 billion rescue deal soon," wrote Andy Mukherjee. "Among South Asia's major economies, only India remains standing." Because of the "18 million-strong Indian diaspora, the world's single largest community of people living outside their country of birth. Give them a juicy yield and they'll park hard-currency time deposits with Indian banks, something they have done unfailingly in the past to get their motherland out of tight spots." "After tugging at the patriotic heartstrings of NRI customers by telling them how their remittances help create jobs and improve healthcare and educational facilities back home, the State Bank of India, the country's largest lender, is informing them of the 2.85% it's offering on dollar deposits of one to two years. This is already generous: Hong Kong banks aren't paying much more than 0.3% for 12-month US currency funds." "With consumer price inflation in the US hovering at 8% and personal consumption expenditure inflation at more than 6%, the Fed has no choice but to hike rates further," wrote Rajani Sinha. "This implies that the dollar's upward trend is likely to continue." "The dollar index has strengthened against its trading partners by more than 11% this calendar year," so that there "has been a depreciation of the pound sterling, the euro, and nearly all emerging market (EM) currencies," wrote Rajeswari Sengupta. "If rupee fails to follow when other EM currencies are depreciating, India's exports will lose competitiveness." The problem is inflation. Consumer inflation (CPI) was below 2% in the US till March 2021, since when it has risen to 9.1% in June 2022, usinflationcalculator. Inflation rate in India is consistently higher, macrotrends, which is a weakening bias compared to the dollar. In a series of hikes the US Federal Reserve has raised rates from 0-0.25% to 2.25%-2.5% to bring down CPI inflation to 2%. CNBC. The RBI, on the other hand has raised interest rate from 4% to 4.9%, HT, thereby reducing the interest rate differential with the US to 2.4 from 4.0. The RBI has been selling dollars to strengthen the rupee against the dollar which will reduce the cost of imports and control inflation. India's exports to the US was $76.11 while imports were $43.31 billion, giving a positive trade balance in our favor. ET. Artificially increasing the value of the rupee may hurt our exports to the US. The RBI has its finger in the dyke. Hope it works.