How does a widening trade deficit impact the rupee?

India’s trade deficit widened to a record high of $23.33 billion in May, according to the government's preliminary data. A trade deficit is incurred when a country’s imports exceed exports, like India's do. This means the country needs more dollars to settle its bills, which strengthens the dollar and weakens or depreciates the rupee. Let's assume that chocolates are the only product in the market and India imports more chocolates from the US than it exports. Then India needs to buy more dollars, and that outweighs the demand for the rupee. A weaker rupee, in turn, makes imports costlier, further widening the trade deficit, and thus triggering a vicious cycle.