Rupee Weakness May Reflect FII Reluctance, Says CEA Nageswaran

The weakness in the rupee against the US dollar could be a reflection of foreign investors' reluctance over India given global geopolitical uncertainty, Chief Economic Advisor V Anantha Nageswaran told NDTV Profit on Thursday. The Economic Survey 2026 has noted that the currency's performance has been influenced more by global portfolio investment trends than domestic fundamentals.

"It is difficult to say that FIIs are staying away because of the rupee level alone. FII behaviour can be influenced by multiple global events. The rupee can also be a reflection of FII reluctance," he said. FPIs have offloaded India equities worth Rs 35,890 so far this year, as per NSDL data.

The Indian rupee closed near a record low level against the US dollar on Thursday. The local currency ended 17 paise weaker at 91.956. Intraday, the INR weakened past 92 per dollar.

Nageswaran also placed current market behaviour in a broader global context, arguing that prolonged accommodative monetary policies since the global financial crisis have distorted asset prices worldwide. “Easy money since the global financial crisis has resulted in the proliferation of private credit, stock market valuation, etc.," he said, suggesting that ongoing global financial adjustments are weighing on emerging market currencies and capital flows.

On the external front, the CEA said India's trade strategy, including recently concluded Free Trade Agreements (FTAs), is expected to play a growing role in boosting exports and manufacturing competitiveness. He indicated that several FTAs are likely to become operational within the next year, improving access to key markets and integrating Indian firms more deeply into global value chains.

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