In a conversation with ET Now, Venugopal Garre, MD, Bernstein said that recent pressure on the rupee is largely driven by external geopolitical factors rather than domestic economic mismanagement. He noted that such challenges are difficult to control in the near term and require careful policy handling to avoid destabilising sentiment.
He also warned that continued weakness in the currency could become inflationary and impact market confidence, particularly for a country running a current account deficit. According to him, while India has foreign exchange reserves, they may not be sufficient to fully absorb prolonged volatility if external pressures persist.
