How rupee became a victim of geopolitics & a strategic power gap in 2025: Economic Survey explains

The Indian rupee's decline in 2025, marked by its status as the worst performing Asian currency, has raised concerns among economists and policymakers. According to the Economic Survey, geopolitical tensions and a strategic power gap significantly contributed to this downturn. The rupee's value plummeted, reaching a lifetime low of 92 against the dollar, as regional conflicts and shifting alliances disrupted trade and investment flows. The survey highlights how India's dependence on energy imports and its vulnerabilities in global supply chains exacerbated the currency's fall. With major trading partners embroiled in geopolitical strife, the rupee faced external pressures that strained its stability. Moreover, India's strategic power gap, stemming from a lack of cohesive foreign policy and military readiness, further weakened investor confidence, leading to capital outflows and market volatility. Looking ahead, the Economic Survey suggests a multifaceted approach to stabilize the rupee. Strengthening diplomatic ties, diversifying energy sources, and enhancing domestic production capabilities are crucial steps. By addressing these underlying issues, India could mitigate the geopolitical risks and strategic gaps that have left its currency vulnerable, paving the way for a more resilient economic future.

— Authored by Next24 Live