India’s prime minister knows the risks of a weak currency
Illustration: Lan Truong
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T HE INDIAN rupee has not had a good war. It was worth 90.95 to the dollar when America and Israel started bombing Iran on February 28th. By the end of March it had fallen by 4%, to 94.65; the euro and the pound, by contrast, was down only 1% or so. That comes on top of the 5% the rupee declined last year, when Donald Trump’s punitive tariffs and a weak domestic market helped make it Asia’s worst-performing currency. It will probably swing both ways in the coming days as traders digest new rules from the central bank that aim to strengthen it, or Mr Trump changes his mind about his war, but the trajectory is clear. Each week in March, and frequently last year, newspapers ran stories with the now-familiar words “record low”. People want someone to blame.
Indians are unusually attentive to the value of their currency. Such vigilance is not uncommon in economically maladministered countries like Turkey. Even advanced economies’ currencies can take on a political hue, as in post-Brexit Britain. But India has stable governance, modest inflation, ample foreign reserves and consistently high growth. The rupee’s weakness is caused by many factors, only some of which have to do with domestic policy. So why hold whoever is in power responsible for a weak rupee?
One reason is that Narendra Modi has trained Indians to think that way. The rupee lost nearly a fifth of its value in 2013, when the country’s high inflation and wide current-account deficit left it particularly vulnerable to policy changes in America that spooked investors worldwide. Mr Modi, then a state leader with his eye on the top job, delivered fiery speeches denouncing the Congress Party-led government of the day for the collapse. “This is not just for economic reasons,” he thundered in one outing, but “because of the corrupt politics of Delhi.” Fellow leaders of his Bharatiya Janata Party (BJP) amplified the message.
Mr Modi is an astute tactician who knew exactly what he was doing. Congress was deeply unpopular and beset by allegations of corruption. And India has fetishised the rupee ever since it took control of its own destiny at independence. A strong currency has long been seen as “a matter of international prestige”, writes Srijan Shukla of the Observer Research Foundation, a think-tank. Mr Modi’s insight was to see how he could gain by politicising the fixation. Opposition politicians are now relishing the chance to give him a taste of his own medicine.
The event that first cemented in Indians’ minds the connection between the rupee and the country’s international standing came in 1991. When India’s leaders opened up its economy that year they did so under duress. A balance-of-payments crisis, worsened by war in the Middle East and surging oil prices, left just enough foreign exchange to cover two weeks of imports. The government pledged nearly 50 tonnes of gold to help tide itself over. The national equivalent of pawning the family jewels, it was seen domestically as a collective loss of face. The currency was then devalued by 9% and, two days later, another 11%, heaping insult upon insult.
The reforms that followed the crisis of 1991 set India on the path to prosperity. Today it is a robust, resilient economy. The risk of another balance-of-payments crisis is low: India has some of the largest foreign reserves in the world, enough to cover nearly a year of imports. Yet the trauma of 1991 has scarred the national psyche, passing from one generation to the next. A sharply falling currency is, for many, inseparable from the shame of that period.
The current bout of depreciation will have real-world effects, affecting the prices of everything from energy to consumer goods to the government’s subsidy bills (though it will also make India’s exports cheaper). High oil prices and a weak rupee are a double whammy, bad news economically but manageable politically. There is, however, a scenario that should unnerve the government. If the war drags on, the rupee will hit the psychological level of 100 to the greenback. Even if the fighting stops tomorrow, lingering elevated energy prices—plus the structural weakness of India’s currency—will inevitably see the rupee flirt with triple digits. The central bank will try to prevent that from happening, but there are limits.
Mr Modi is no supporter of the Iran war. But nor has he prepared his nation for what might still be to come. It is a rare miscalculation by a man who understands better than anyone the passions aroused by a falling rupee.■
논증 분석
유형: causal
핵심 주장
루피화 약세는 Narendra Modi에게 심각한 정치적 위협이 되는데, 이는 그가 스스로 루피 가치를 국가 위신과 연결 짓는 정치적 담론을 만들었기 때문이다.
논리구조
- 전제: 루피화는 2026년 2월 말 미국·이스라엘의 이란 폭격 이후 4% 하락하며 연속 ‘역대 최저’ 기록을 경신하고 있으며, 전년도 5% 하락에 이어 아시아 최약세 통화로 전락했다.
- 진단: 인도인들은 터키 같은 경제 실정 국가나 Brexit 이후 영국처럼 통화 가치에 비정상적으로 민감하게 반응하는데, 이는 1991년 외환위기 당시 금 담보 제공과 루피화 이중 평가절하라는 집단적 수치의 트라우마에서 비롯된다.
- 논거: Narendra Modi는 2013년 루피 약세 당시 Congress Party 정부를 맹비난하며 루피 가치 하락을 ‘부패한 델리 정치’와 연결 짓는 정치적 담론을 스스로 창출했고, Bharatiya Janata Party(BJP)도 이를 증폭시켰다.
- 논거: 강한 통화는 인도 독립 이후 ‘국제적 위신의 문제’로 여겨져 왔으며, Modi는 이 민족적 집착을 정치화함으로써 이익을 얻을 수 있다는 것을 정확히 간파한 영민한 전술가였다.
- 논거: 현재 루피 약세는 국내 정책보다 이란 전쟁, Donald Trump의 관세 등 외부 요인에 주로 기인하지만, 인도는 충분한 외환보유고를 보유하여 1991년식 위기 재발 가능성은 낮다.
- 진단: 그러나 루피가 심리적 저항선인 달러당 100루피를 돌파할 경우, 이는 단순한 경제 문제를 넘어 1991년의 국가적 수치를 상기시키는 강력한 정치적 타격이 될 수 있다.
- 반론: Modi가 이란 전쟁을 지지하지 않으며 루피 약세의 주된 원인은 외부적이라는 점에서, 그에 대한 책임 귀속은 다소 불공정할 수 있다.
- 결론: Modi는 루피 약세가 야기하는 대중적 분노를 누구보다 잘 이해하면서도, 전쟁이 지속될 경우의 파장에 국민을 준비시키지 않았다는 점에서 드문 전략적 실책을 범하고 있다.
결론
Modi는 자신이 만든 ‘루피=국가 위신’ 담론의 덫에 스스로 걸려들었으며, 야당은 이제 그가 2013년에 구사했던 바로 그 전술로 그를 공격할 기회를 얻었다.