Clipped from: https://www.thehindubusinessline.com/money-and-banking/days-of-largesse-forex-flows-over-sbi-report/article70408173.ece
ERD officials emphasised that while the rupee is the most depreciated currency, it is not the most volatile.
ERD officials said past trends suggest that during CY07-CY14 net portfolio inflows averaged $162.8 billion, while from CY15 to CY25 (*till date) portfolio inflows have been much lower at $87.7 billion. | Photo Credit: iStockphoto
The days of largesse forex flows are over as geopolitical uncertainties have taken the centre stage, according to a report by SBI’s economic research department ERD).
The ERD officials also noted that the rupee (INR) is likely to exit the current depreciating regime and bounce back strongly in the second half of next fiscal.
They underscored that the RBI is estimated to have intervened in the forex market to the tune of $30 billion during the June-October period to smoothen excessive and disruptive volatility in the exchange rate of the Indian rupee.
The officials said past trends suggest that during CY (calendar year) 07-CY14 net portfolio inflows averaged $162.8 billion, while from CY15-CY25 (*till date) portfolio inflows have been much lower at $87.7 billion.
“The abundance of portfolio inflows prior to CY14 was the primary reason for rupee movements…Such a luxury is absent now as geopolitical uncertainties driven by the delay in trade deal has been the single most important reason…India’s trade data shows the remarkable resilience in navigating through prolonged uncertainty, more protectionism and labor supply shocks,” the officials said.
Dollar, rupee depreciating
While the geopolitical risk index has moderated since April 2025, the current average value of index for April-October 2025 is much greater than its decadal average, which indicate how much pressure global uncertainties is exerting on the rupee, they added.
The ERD officials observed that from September 2024 till present, both dollar and rupee are depreciating. This concurrent depreciation marks a distinct phase characterised by heightened geopolitical uncertainty in the present global order.
They assessed that since April 2, 2025, when US announced sweeping tariff hikes across economies, the rupee has deprecated by 5.7 per cent against the dollar (most amongst the major economies), notwithstanding sporadic phases of appreciation owing to optimism over US-India trade deal. They emphasised that while the rupee is the most depreciated currency, it is not the most volatile.
This clearly indicate that the 50 per cent tariff imposed on India is one of the major factors behind the current phase of rupee depreciation.
Published on December 17, 2025
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