Rupee Depreciation
Causes, Transmission, and RBI Tools
The exchange rate of the Indian rupee is managed under a "managed float" regime — the RBI does not fix the rate but intervenes to prevent excessive volatility. Depreciation of the rupee is caused by excess demand for dollars (import payments, capital outflows, debt servicing) over dollar supply (export earnings, FDI, remittances). Depreciation has a dual effect: it makes imports costlier (particularly oil, worsening inflation) while making exports more competitive, though the J-curve effect means the trade balance improvement takes 6–18 months to materialise.
- Rupee all-time low: ₹95.33 per USD (30 April 2026); 12-month depreciation approximately 12 percent.
- RBI forex market intervention tools: spot market dollar sales, forward market operations, NRI deposit scheme incentives, import duty adjustments.
- The J-curve effect: trade balance initially worsens after depreciation (due to pre-contracted imports) before improving as exporters respond.
- Every ₹1 depreciation of the rupee raises the crude oil import bill by approximately USD 1.5–2 billion annually (at current import volumes).
● Tracked since March 02, 2026 · last seen May 12, 2026 · updates as the daily brief publishes
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