wp_dropdown_categories not showing option as selected

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OK, so you’ve put this code on category archive, I assume, and the dropdown always shows the same category, right?

And it’s exactly what it’s supposed to do with current code. In this line:

    'selected' => 1,

you decide, that item with value 1 is selected. Probably there is no such value (1 doesn’t occur as term slug very often), so the first item is selected.

So how should that code really look like?

You should pass proper value as selected param. If you’re showing this dropdown on category archive page, then you can use get_queried_object() function to obtain current category:

$current_category = get_queried_object();
$terms = wp_dropdown_categories(array(
        'taxonomy' => 'news-categories',
        'hierarchical' => 1,
        'show_option_none' => "CATEGORIES",
        'option_none_value' => "",
        'name' => 'news_cat_name',
        'id' => 'cat_search',
        'value_field' => 'slug',
        'selected' => $current_category->slug,
));