To put $1.75 trillion into perspective, If $1.75 trillion were a country, it would rank around the world’s 12th–15th largest economy. But, how was this number determined in the first place? And how does it impact us?

How the number was set

SpaceX priced its IPO at $135 a share, selling roughly 555.6 million shares to raise about $75 billion, the largest fundraise ever, surpassing Saudi Aramco’s $29 billion debut in 2019. Multiply that share price by the total number of shares outstanding, and you get the figure of somewhere between $1.75 and $1.77 trillion.

What people missed was the fact that only about 4% of SpaceX’s total shares were actually sold in the IPO. Insiders, including Elon Musk, who retains over 80% voting control, can’t sell their shares for another 180 days. So the entire trillion-dollar valuation is really being set by trading in a tiny sliver of the company, roughly $70 billion worth of stock out of $1.75 trillion in “value.”

That matters because normally, IPO pricing involves weeks of back-and-forth between underwriters and big institutional buyers to discover a fair price, a process called book-building. Some analysts, including B Capital’s Howard Morgan, pointed out ahead of the listing that this usually didn’t happen here in the typical way, and that a more market-tested process might have landed closer to $1.2–1.3 trillion. Add in the fact that MSCI fast-tracked SpaceX into major indexes starting the very next trading day, funnelling passive index money straight into the stock, and you have a valuation shaped as much by mechanics and demand-for-a-thin-float as by a sober read of the company’s fundamentals.

What actually happened

The stock didn’t just hold at $135, it opened around $150 and closed its first day at $161, up nearly 19%, briefly pushing SpaceX’s market cap above $2 trillion, within striking distance of Amazon.

Not everyone was convinced. Morningstar had already published a note before the listing valuing SpaceX at closer to $780 billion, less than half the IPO target, arguing that the AI unit (xAI, folded into SpaceX earlier this year) carried real risk of destroying value rather than adding it, and that the core valuation leaned heavily on optimistic bets about future orbital data centres and reusable Starship flights that haven’t been proven out yet. CFRA’s Keith Snyder went further, slapping a sell rating on the stock on day one. Worth remembering too: SpaceX lost close to $5 billion last year on revenue under $19 billion, a company valued at over 100 times its sales, at a size where it would rank around the 200th largest firm in the US by revenue, despite being the 7th largest by market cap.

Why it matters beyond the headline

Even if you never buy a single SPCX share, this listing touches you indirectly. Once MSCI added it to major indexes, it started flowing into the ETFs and index funds that sit inside ordinary retirement accounts and mutual funds around the world. It’s also becoming the playbook other giants, reportedly including AI labs weighing their own future listings, will study: how to go public with a razor-thin float, skip traditional price discovery, and let index inclusion do the heavy lifting on demand.

The deeper lesson is less about SpaceX specifically and more about what a “valuation” means at this scale. $1.75 trillion isn’t a bank balance or a check SpaceX could cash, it’s a price times a share count, set largely by a small fraction of stock changing hands in a hyped, thinly-traded market. It’s a real number with real consequences, but it’s not a fact about SpaceX’s worth in any settled sense, it’s a bet, repriced every single day the market is open.

Rohera’s Thought

Honestly? I think it’s crazy. Not “SpaceX isn’t a great company” crazy, it dominates global launches and Starlink is a genuinely enormous business. But watching a company that lost nearly $5 billion last year get priced above entire G20 economies, on the back of just 4% of its shares trading hands, breaks something in my brain a little. It tells you the number on day one wasn’t really a measurement of SpaceX’s worth, it was a measurement of how badly the market wanted in, with almost no actual company available to buy.

So you went out looking for the reason. Turns out, somewhere in Mumbai, a committee of six people had sat in a room and decided to change one number. That single decision is the reason the EMI moved.

The Reserve Bank of India, also known as RBI is the bank that regulates the Rupee (₹) in India. Think of it as the institution that manages the country’s money and financial system. Unlike commercial banks (such as SBI, HDFC, or ICICI), the RBI doesn’t exist to make profits or provide everyday banking services to the public. Its job is to keep the economy and financial system stable.

The RBI is also responsible for issuing and managing India’s currency. It ensures there is a decent supply of banknotes, replaces damaged or worn-out notes, and works to maintain public confidence in the currency. It also regulates and supervises banks and other financial institutions, setting rules that promote financial stability within the country.

Repo Rate

Banks run out of cash constantly. Not because they’re badly run, but because money is always flowing, people like you, and I keep withdrawing, depositing, loans going out, loans coming in. When a bank is short on cash for a day or two, it doesn’t panic. It just borrows from the RBI overnight.

The interest rate the RBI charges banks for that overnight loan is called the repo rate. One rate, one transaction, repeated across every bank in the country, every single day.

The catch is that this one rate doesn’t stay contained to the RBI and the banks. It travels.

Step 1: RBI changes the repo rate. Let’s say it goes up, from 6% to 6.25%.

Step 2: Borrowing becomes more expensive for banks. If banks are paying more to borrow from the RBI, they’re not going to absorb that cost themselves. They pass it on.

Step 3: Your loan rates go up. Home loans, car loans, personal loans, all priced more expensively, because the bank’s own cost of funds has gone up.

Step 4: People borrow less, and spend less. A 0.5% hike doesn’t sound dramatic until you put real numbers on it. Say you have a ₹50 lakh home loan over 20 years. At 8.5%, your EMI is roughly ₹43,400. Bump the rate to 9%, and that EMI climbs to about ₹45,000. That’s an extra ₹1,600 a month, every month, for the rest of the loan. Multiply that across millions of borrowers and you start to see why this matters at the scale of the whole economy.

When the loans get pricier, fewer people take them. Fewer people buy homes, or take on new business loans. Their spending slows down.

Step 5: Businesses feel it. Less spending means businesses sell less. Less revenue often means hiring slows, expansion plans get shelved, and in some cases, layoffs happen.

Step 6: Inflation cools off. When people spend less, demand for goods and services drops, and prices stop rising as fast. Inflation comes down.

RBI’s job is to prevent prices from rising too fast. The target is inflation of around 4%, with some room to move either side of that. Everything described above, the rate changes, the EMI shifts, the slower spending, exists to serve that one goal.

Rohera’s Thought:

There is no rate the RBI can set that satisfies every stakeholder simultaneously. Savers benefit from higher rates through better returns on deposits; borrowers are disadvantaged by the same decision through costlier EMIs. There is no “correct” rate at all in my opinion, only a continuous negotiation between competing economic priorities, conducted six times a year, in Mumbai.

In simple terms, a recession is defined as a significant decline in growth for economic activity, which results in a drop in the gross domestic product (GDP) and rising unemployment.

That’s all we hear, or see whenever we google anything related to a recession. However, it’s much more than that, and much deeper than that.

Before we get into the causes, let’s start with an example.

2008 Housing Crisis

In 2008, American banks had spent years giving out home loans to people who couldn’t really afford them. Their assumption was simple: house prices always go up, so even if someone couldn’t repay, the bank could just sell the house and recover their money. It seemed safe enough.

To get these risky loans off the books, banks bundled thousands of them together and sold them to investors worldwide as financial products. Agencies put them as safe. Investors bought them without fully understanding what was inside. The risk didn’t disappear, it just got passed around until nobody knew who was holding it.

When house prices stopped rising, homeowners started defaulting. Those “safe” products turned worthless almost overnight. Banks that owned them suddenly didn’t know how much they were actually worth, so they stopped trusting each other. Lending froze. Credit, which is the thing businesses use to pay salaries, manage inventory, and stay operational, dried up.

Lehman Brothers, one of Wall Street’s biggest banks, collapsed in September 2008. Stock markets fell. Companies stopped hiring, then started cutting. Unemployment rose sharply.

The people who lost jobs, factory workers, working professionals, students, had nothing to do with mortgages. But they paid the price anyway.

But a housing crash isn’t the only way a recession starts.

COVID-19

The most classic example. The 2020 recession had nothing to do with debt or financial systems. Governments worldwide shut down economies overnight to contain a pandemic. Factories stopped. Flights were grounded. Restaurants, hotels, retail, closed. Supply chains that took decades to build collapsed in weeks. Businesses had no revenue but still had rent, salaries, and loans to pay. Mass layoffs followed almost immediately. The economy didn’t crack under financial pressure, it was simply switched off.

The chart illustrates economic growth trends for advanced economies, emerging and developing economies, and the world as a whole from 2000 onward. While the 2008 Global Financial Crisis caused a significant slowdown, the COVID-19 pandemic in 2020 led to a much steeper decline as lockdowns disrupted production, trade, consumption, and employment worldwide. Global GDP contracted sharply, with advanced economies experiencing particularly severe declines. However, aggressive government stimulus packages, central bank interventions, and the reopening of economies contributed to a strong rebound in 2021, highlighting both the severity of the shock and the resilience of the global economic system.

So if the cause is never the same, what actually causes a recession?

The two examples above look nothing alike. One built up over years of because of bad lending from banks. The other happened in weeks because of a worldwide pandemic. But both of these ended the same way, jobs lost, ordinary people paying for something they didn’t cause.

That’s because recessions aren’t caused by one factor. They’re caused by conditions. And the same conditions show up every single time.

Here are the ones that matter.

Debt

When borrowing is cheap and times are good, everyone borrows more than they should. Individuals buy homes they can’t afford. Companies take on loans to expand aggressively. Governments run large deficits. This feels fine while the economy is growing because the assumption is that tomorrow will be better than today.

The problem is debt doesn’t disappear. It sits on balance sheets, accumulating. When growth slows even a little repayments become harder, defaults rise, and lenders pull back. The debt that fuelled growth on the way up becomes the anchor that drags it down. 2008 is the textbook case, but almost every major recession has some version of this underneath it.

Assets

Prices of homes, stocks, or any asset rising far beyond their real value, sustained purely by the belief that they’ll keep rising. The moment that belief breaks, prices correct sharply, and everyone who borrowed against those inflated values is suddenly in trouble.

Bubbles are obvious in hindsight and almost invisible in the moment, because while they’re growing, everyone is making money. Pointing out that something is overvalued when your neighbour just made 40% on his investment is a lonely position.

Supply

Sometimes the economy doesn’t crack from within — it gets hit from outside. Oil prices spiking, a pandemic shutting factories, a war disrupting food supply. These shocks drive costs up, reduce production, and slow growth rapidly. Businesses can’t absorb the costs, consumers pull back, and the economy contracts.

Policy

This one doesn’t get talked about enough because it means blaming governments and central banks, which is uncomfortable. But it’s real.

The UK in 2022 is a great example. In September, newly appointed Chancellor Kwasi Kwarteng announced £45 billion worth of unfunded tax cuts, meaning the government planned to spend money it didn’t have, without explaining where it would come from. Markets reacted immediately. The pound crashed to near-parity with the dollar. UK government bond yields, the interest rate the government pays to borrow, spiked so sharply that pension funds across the country faced a liquidity crisis overnight. The Bank of England had to step in and buy bonds to prevent a full collapse.

Liz Truss resigned 45 days into her tenure as Prime Minister. This wasn’t really a financial crisis or a pandemic. It was caused by a policy announcement that destroyed market confidence over the weekend. The economy didn’t need an external shock, the government provided the shock itself.

Rohera’s Thoughts

Most people focus on what caused the recession because the cause is easy to see. The housing crash. The pandemic. These make for clean headlines.

What rarely gets talked about is how vulnerable the economy was before the trigger showed up. That’s the real story.

A recession usually isn’t caused by a single event. In a strong, healthy economy, one shock alone shouldn’t be enough to cause a major downturn. Instead, the trigger exposes problems that were already building beneath the surface.

So the better question isn’t, “What caused the recession?” It’s, “What warning signs did we ignore when everything seemed fine?”

The answer is often the same, too much debt, too much optimism, and too little margin for things to go wrong.

In 2004, ₹100 could buy you roughly $2.2. In 2026, it buys you $1.2. That’s not inflation. That’s our currency quietly losing a fight it’s been in for decades.

We all have felt it somewhere. The iphone costs ₹10,000 more than last year, that college tuition you are paying feels slightly heavier every year. Nobody sat us down and explained to us “why” this is happening, and even if it is happening, what are we doing about it?

The news just calls it “the rupee is under pressure because of the USA-Iran war” and expects everyone to move on with their lives. This article doesn’t move on, it rather gives the longer and more elaborate answer of what is actually happening, and who are the stakeholders that are actually impacted, including us.

The US Dollar

Before we talk about why the rupee weakens, we need to understand what strengthens the dollar in the first place.

The US Dollar serves as the world’s primary reserve currency, which means that central banks, and global systems hold massive amounts of the US dollar as a safety net. This safety net by global banks is used to stabilize national economies and help during financial crises, or prevent a currency from collapsing.

Being the world’s go to reserve currency provides a huge privilege to the US dollar. It allows them to borrow at minimal interest rates, reduce their import costs and enforce powerful financial sanctions. For example, when the US raises the global interest rates global money flows towards the dollar and every other currency weakens by default.

Contextualising the impact of the strengthening U.S. dollar, as of June 2026, the USD/INR exchange rate is trading in the range of ₹95.00–₹95.70 per U.S. dollar. This represents an approximately 11.41% appreciation of the USD against the INR compared to June 2025.

One of the major reasons for this appreciation mainly lies in India’s import of Crude oil, also known as petroleum. India imports around 85% to 88% of its crude oil to meet its massive energy needs.

But why does it import almost 90% of its crude oil in the first place?

The short answer here is the oil just isn’t here.

The longer answer is more compelling.

India does have oil fields, in Rajasthan, Gujarat, and Mumbai. But here’s the problem: India’s domestic oil production has actually fallen, from 32 million metric tonnes in 1990 to 29.4 million metric tonnes in 2024. In short, we are producing less oil today than we were 35 years ago. Moreover, the country has grown enormously. More cars. More factories. More households cooking with LPG. India is now responsible for a quarter of all global oil demand growth in 2024 and 2025.

Strait of Hormuz

Picture a really really narrow pathway of water, almost 33 kilometers sitting right between Iran and Oman, that is the Strait of Hormuz. Almost 20 million barrels of crude oil and other oil products moved through the strait every day in 2025, about one-fifth of all globally traded oil.

The context here is important because tensions between Israel and Iran had been happening for years, conflicts, drone attacks. On February 28, 2026, The US and Israel launched joint strikes against Iran, killing several key Iranian officials, including Supreme Leader Ayatollah Khamenei. It was a Saturday, Oil markets weren’t open yet.

Brent crude surged more than 55% from the start of the conflict, jumping from around $72 a barrel on February 27 to nearly $120 at its peak US and Israeli strikes on Iran triggered an effective closure of the Strait of Hormuz, halting tanker traffic through a route that carries 20% of global oil supply.

The rupee cracked hard.

By March 23, 2026, the rupee hit a fresh record low of ₹93.94 to the dollar, down 3.6% in just that year alone. Because oil is priced in dollars, and India, who imports 90% of its crude oil, placed immediate pressure on exchange rates and trade balances.

Because of the rise in the crude oil prices, India needed significantly more dollars to pay for the rising oil barrel prices putting direct downward pressure on the rupee Foreign investors simultaneously sold over $19 billion in Indian equities and bonds, selling rupees to buy dollars, weakening the currency further.

The Reserve Bank of India

The Reserve Bank of India (RBI) is the sole authority which regulates the Indian rupee.

The obvious question: Why can’t the RBI just make the rupee stronger?

Basically, India follows a managed float system, also called a “dirty float.” This system means, the market determines the rupee, and if it goes up or down. Global demand and supply for dollars versus rupees is the primary driver, but the RBI steps in when the moves become too sharp.

When the rupee weakens sharply such as during the Strait of Hormuz crisis, the RBI has a few tools. it sells US dollars from its reserves into the market, absorbing rupees in return. More dollars in the market, because there are more dollars in the market it gets cheaper relative to rupee, and the rupee stabilises.

During the Iran war shock this year, the RBI did exactly this, very aggressively. India’s forex reserves fell sharply from a record $728 billion in late February to $681 billion by May 2026, as the RBI put more dollars in the market to support the rupee. That’s $47 billion spent in three months just to slow the rupee’s slide.

However, India’s forex reserves, those dollars the RBI sells to defend the rupee, aren’t infinite. The RBI cannot keep selling dollars continuously because India needs those reserves to pay for essential imports such as: crude oil, machinery. Current reserves cover around 11 months of imports, that sounds comfortable, but burn through them defending a currency level the market doesn’t believe in, and you end up in a crisis far worse than a weak rupee.

Every dollar spent defending the rupee today is one less dollar available if something bigger goes wrong tomorrow.

A Stronger Rupee?

This is the part that feels counterintuitive. Most people assume a stronger rupee is always better. It isn’t, not for everyone.

India’s IT sector such as Infosys, TCS, Wipro, earn in dollars and pay their costs in rupees. When the rupee weakens, their rupee revenues go up without doing anything different. When the rupee strengthens, the goods and services become more expensive for foreign buyers, hurting their exports. For IT services companies dependent on US revenues, a stronger rupee directly impacts their margins of business.

So paradoxically, the RBI sometimes stops the rupee from getting too strong, not just too weak.

Rohera’s Thought.

One thing is important here is to understand a change in mindset is needed. Especially considering what Dr. Shamika Ravi said on June 3, 2026.

If the rupee falls to ₹100 per dollar, it signals that imports become more expensive for India, particularly crude oil, electronics, machinery, and other essential goods. This can fuel inflation, raise production costs, and put pressure on households.

For a country that still depends heavily on imported energy, a weaker rupee is not merely symbolic. It can widen the import bill, strain government finances through higher subsidy costs, and make overseas education, foreign travel, and international debt repayments more expensive.

Economic fundamentals should absolutely remain the primary focus.

From my perspective, ₹100 per dollar is not a crisis simply because it is a round number. But neither is it “just a number.” It potrays a threshold that can have drastic economic effects, especially in an import-dependent economy like India. The right approach is neither panic nor indifference, but take a careful assessment of what is driving the depreciation of the rupee and what consequences it may bring in the near future for India.