Key Factors Behind the Rupee Depreciation ✅Strengthening US Dollar: The Dollar Index surged 1.24% to 109.84, reflecting increased investor confidence in the US economy. Robust job data, expectations of prolonged higher interest rates, and rising US Treasury yields have made the dollar more attractive. ✅Escalating Trade War Fears: US President Donald Trump’s tariffs on Canada, Mexico, and China have heightened global trade tensions. Canada and Mexico, which export over $840 billion worth of goods to the US, have announced retaliatory measures. China faces a potential 10% tariff, which has weakened the Yuan, indirectly impacting the Indian Rupee. ✅Foreign Institutional Investor (FII) Outflows: FIIs have been aggressively selling Indian assets since October 2024, withdrawing $11 billion in Q3 FY25, adding further pressure on the currency. ✅Widening Trade Deficit: India’s trade deficit has reached $188 billion, up 18% from FY24, reflecting the high import dependency, especially on crude oil. ✅RBI’s Intervention and Monetary Policy Outlook: The Reserve Bank of India (RBI) has been managing the currency volatility through forex interventions, selling $3.3 billion in reserves over the last seven weeks. However, with inflation concerns mounting, all eyes are on the upcoming RBI monetary policy review later this week