India’s chief economic adviser V. Anantha Nageswaran said the rupee remains “undervalued relative to fundamentals” and argued that its current levels do not fully reflect the strength of the country’s macroeconomic position, although the currency’s weakness has affected global perceptions of India’s economy.
In recent interactions on Bloomberg Television, Nageswaran argued that the depreciation of the rupee should be seen in the context of the dollar’s broader global growth rather than domestic fragility. “The rupee is undervalued given the fundamentals,” he said, playing down concerns about its slide, adding that he was “not losing sleep over it.”
The Indian rupee has remained under pressure in recent months, trading near 83-84 to the US dollar and hovering near record lows. The currency has seen a gradual depreciating trend of around 2-3% per year in recent years, largely tracking the strength of the US dollar index, which has remained elevated amid higher US interest rates and global uncertainty.
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Despite this, India’s macroeconomic fundamentals remain strong. The economy is expected to grow around 6.5-7% in FY26, making it one of the fastest growing major economies in the world. India’s nominal GDP is roughly $3.7–3.9 trillion, placing it among the world’s top economies, although its exact position currently around fifth or sixth place has fluctuated more due to exchange rate movements than any significant change in real output.
Nageswaran and other politicians have pointed to India’s external power as a key stabilizing factor.
The country’s foreign exchange reserves, managed by the Reserve Bank of India, remain strong at around US$630-650 billion, a substantial buffer against currency volatility and external shocks.
At the same time, a relatively weaker rupee offers strategic advantages. Export-oriented industries such as IT services, pharmaceuticals and textiles benefit from improved price competitiveness. India’s services exports have exceeded $300 billion annually, with IT services accounting for nearly half of this total. At the same time, exports of goods remain in the range of 430-450 billion dollars.
For companies that earn in dollars, a depreciation of the rupee usually increases margins when earnings are translated back into the local currency.
The “underrated” story is also framed as a potential lure for foreign investors. India continues to attract strong inflows of foreign direct investment, averaging US$70-85 billion annually in recent years. A weaker currency lowers entry costs for global investors, making Indian assets relatively more attractive, even as portfolio flows remain sensitive to global interest rate cycles.
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However, there are trade-offs. India imports nearly 85% of its oil requirements, meaning a weaker rupee could raise import costs and add to inflationary pressures. This creates a balance for policymakers, especially the central bank, as they manage growth along with price stability.
Apart from commenting on the currency, Nageswaran also addressed India’s ongoing trade talks with the United States. He described the proposed agreement as somewhat “elusive”, but expressed optimism about its conclusion within the current financial year. “I was hoping something would be done by the end of November, but that has proved elusive,” he said. “That’s why it’s hard to put a timetable on it. But I’d be surprised if we don’t have it sealed by the end of the financial year.”
The remarks underscore the government’s broader stance: while the rupee may appear weak, policymakers see it as a reflection of global adjustments rather than domestic vulnerabilities that could boost exports, attract investment and sustain India’s growth momentum despite external headwinds.
