<h1>Falling rupee raises import costs and inflation, strains unhedged borrowers and narrows export benefits.</h1> A sustained currency depreciation of the rupee raises import costs and domestic inflation, squeezes corporate margins through costlier crude and intermediates, widens the trade deficit, and increases financial stress for firms and households with unhedged foreign exposures, while central bank activity across spot, forward and NDF markets has stabilised the exchange rate but may be recalibrating intervention thresholds.