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Rupee rebounds, but risks abound

The rupee experienced a temporary rebound driven by Hormuz Strait optimism and cooling oil prices, coupled with government interventions offering short-term relief. However, the author argues these measures don't address the currency's fundamental long-term vulnerability. Sluggish investments, insufficient participation in critical growth sectors like AI, and India's high market valuation undermine sustained capital flows. Despite some positive FDI, net results are subdued due to repatriation and outbound investments. The consumption-driven model and tepid private investment persist. The rupee is predicted to resume its decline once crisis-control measures conclude, indicating a critical outlook on its stability.

Economic Times · ET Bureau · Jun 21, 2026 at 5:45 PM

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