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US Debt Crosses $40 Trillion: How America’s Debt Crisis Impacts India and the Rupee
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News18•12-10-2026, 16:50
US Debt Crosses $40 Trillion: How America’s Debt Crisis Impacts India and the Rupee
- •The US national debt has crossed $40.33 trillion due to sustained government spending exceeding revenue, pushing net interest payments above $1 trillion annually.
- •Rising US Treasury yields, with the 10-year yield climbing above 5%, have increased global borrowing costs and made emerging markets less attractive to foreign investors.
- •Higher US yields and capital outflows are putting compounding pressure on the Indian rupee, raising concerns about potential depreciation toward the 98 to 100 range.
- •A weaker rupee increases the cost of dollar-priced imports like crude oil, driving up inflation, energy expenses, and financial burdens for Indian households and businesses.
- •While India holds around $690 billion in foreign exchange reserves and the RBI actively intervenes to manage volatility, sustained global capital flight presents ongoing economic challenges.
Key Questions Answered
The US national debt crossed $40 trillion due to successive administrations spending more than government revenue through public spending, tax policies, economic stimulus, defence expenditure, and rising interest payments on existing debt.
Higher US Treasury yields can draw foreign capital away from emerging markets like India, increasing capital outflows, putting downward pressure on the rupee, and raising the cost of dollar-priced imports such as crude oil.
The RBI has intervened in forex markets by shifting oil companies' dollar purchases away from the spot market, announced a Rs 25,000-crore open market operation sale of government securities, and raised the minimum daily cash reserve ratio requirement for banks to 99 percent.
