Many people assume the Indian government decides the rupee’s value. In reality, since 1993, India follows a market-based system where supply and demand of foreign exchange sets the rate.

The rupee weakens when India imports more than it exports, especially crude oil, which is bought in dollars. Similarly, when foreign investors pull money out of Indian markets, the demand for dollars rises, pushing the rupee down. Global factors, like the strength of the US dollar and interest rate changes, also play a big role.

But does a weaker rupee mean a weak India? Not really. The Turkish Lira and Argentine Peso lost far more value than the rupee in recent years. In fact, the Indian rupee has been one of Asia’s more stable currencies.

Purchasing Power Parity (PPP) also tells another story. Based on PPP, the rupee should be around ₹20 per dollar, which means goods and services are far cheaper in India.

So, while headlines often highlight “falling rupee,” the bigger picture shows resilience. The rupee isn’t simply weak, it’s shaped by global economics, trade patterns, and India’s own growth story.