Reserve Bank of India (RBI) stated in its latest monthly bulletin that Indian rupee faces continued headwinds from a relatively strong dollar, uncertainty about the quantum and composition of capital inflows, and rising import costs. Escalation of geopolitical tensions triggering broader risk aversion in EME asset markets, or a more aggressive tightening by major central banks than currently anticipated, could exert renewed depreciation pressure. In a scenario where the INR depreciates by 5 per cent over the baseline, inflation could be higher by around 40 bps, while GDP growth may benefit by around 25 bps through the export channel in the short term, under normal macroeconomic conditions. In contrast, an appreciation of INR by 5 per cent relative to the baseline would moderate both inflation and GDP growth by around 40 bps and 25 bps, respectively.