New Delhi, Dec. 9 -- The rupee has surpassed the 90 per dollar mark, down over 5% from the start of 2025. While the exchange rate has depreciated quite a bit this year, the most recent trigger was the 12% year-on-year contraction in exports for the month of October, driven mainly by a decline in exports to the US. Markets are spooked by fears that high tariffs have started hurting shipments to India's largest export market.

The good news is that a weaker rupee makes Indian exports cheaper in dollar terms, which offsets some of the damage caused by US tariffs. Even better, this time, the falling nominal exchange rate has been accompanied by falling inflation differentials between India and the US. Consumer price inflation in India has dro...