Over the past 12 months, the Indian rupee has experienced an unprecedented depreciation of about 11.86 percent against the Pakistani rupee. The exchange rate dropped from 3.2913 Pakistani rupees per Indian rupee in May 2025 to 2.9010 by May 2026. This decline began after the 2015 'Operation Sindur' ceasefire mediated by then U.S. President Donald Trump and has continued despite the end of military tensions.

The report suggests that the rupee’s weakness reflects deeper structural issues in India’s economy under Prime Minister Narendra Modi’s government, rather than solely global factors such as the strong U.S. dollar or Middle East conflicts. The Indian rupee also lost nearly 10 percent against the Bangladeshi taka during the same period. Analysts and international observers, including a Financial Times report, have linked the rupee’s fall to declining confidence in Modi’s administration.

A Japanese bank, MUFG, noted that the rupee’s depreciation is likely to persist through the year regardless of developments in West Asia, indicating that India’s internal economic vulnerabilities remain a key concern.