The Government of India addressed concerns regarding the depreciation of the Indian Rupee (INR) and its macroeconomic implications, noting that the currency depreciated by about 9% in FY 2025-26, reaching ₹93.88 per USD. The exchange rate is market-determined, with the Reserve Bank of India (RBI) intervening only to curb excessive volatility, including net forex sales of USD 50.8 billion during April 2025–January 2026. Despite depreciation pressures, India’s foreign exchange reserves increased to USD 709.8 billion as of March 2026, providing import cover of over 11 months. The Government clarified that the impact of rupee depreciation on crude oil import bills cannot be isolated due to multiple influencing factors such as global prices and contractual terms. While depreciation may increase import costs and widen the current account deficit (CAD), it can also enhance export competitiveness. The overall economic impact depends on variables like commodity prices, capital flows, and inflation transmission. The Government emphasized strong macroeconomic fundamentals, including robust GDP growth above 7%, controlled inflation, and stable investment flows. Policy measures such as easing external commercial borrowing norms, promoting INR-based trade, and strengthening export ecosystems are being pursued to ensure stability, manage risks, and reduce dependency on foreign currencies.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 5872
TO BE ANSWERED ON 30.03.2026
EFFECT OF THE DEPRECIATION OF RUPEE ON INDIA’S FOREIGN EXCHANGE RESERVES
†5872. Shri Neeraj Maurya:
Will the Minister of Finance be pleased to state:
a. whether the continuous fall in the value of the Indian Rupee against the US Dollar during the last 12 months has increased pressure on India’s Foreign Exchange Reserves;
b. if so, the detailed breakdown of the increase in India’s annual ‘Petroleum and Crude Oil Import Bill’ due to the depreciation of the Rupee;
c. whether the Government has formulated any new fiscal policy to control non-essential imports or provide export incentives to stabilise the weakening Rupee, if so, the details thereof; and
d. the estimated long-term impact of the falling currency on the country’s Current Account Deficit (CAD) and GDP growth rate?
ANSWER
THE MINISTER OF STATE FOR FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) The Indian Rupee (INR) depreciated against the US Dollar (USD), closing at ₹93.88 per USD on March 24, 2026, with a depreciation of 9.0 per cent in 2025-26 (till March 24, 2026).
The value of the INR is market-determined, with no target or specific level or band. The Reserve Bank of India (RBI) regularly monitors the foreign exchange market and intervenes in situations of excess volatility. During the period April 2025 to Jan 2026, the RBI has made a net sale of USD 50.8 billion in the forex markets. The forex reserves of India stood at 668.3 end-March 2025 and stand at USD 709.8 billion as of March 13, 2026. The reserves are at a comfortable level covering 11.2 months of goods imports.
(b) The import bill for India for crude oil and various petroleum products depends on multiple factors, including the domestic requirements of the products, the time the import contracts were executed, the prevailing international market prices of the products, the negotiated import price, cost of logistics, including maritime insurance and the INR-USD exchange rate at the time of payment. Hence, the one-to-one impact of the depreciation of the rupee against the dollar on the value of the import bill for crude oil and petroleum products cannot be isolated. This needs to be assessed alongside broader market and contractual dynamics.
(c) The Government has set the goal of achieving a self-reliant India with the primary aim of reducing dependence on foreign imports and building a resilient, developed nation. The Government is consistently working to boost exports and expand the country’s global footprint, combining traditional strengths with emerging technology-driven sectors. Central to this ambition is the creation of a supportive ecosystem where exporters, particularly MSMEs, can compete confidently in international markets. This effort is reinforced by a dynamic policy framework, strong financial incentives, a growing digital infrastructure, improved trade facilitation, and a determined push to secure deeper market access through next-generation trade agreements.
(d) The impact of depreciation of INR against the USD on the current account deficit (CAD) and GDP growth depends on multiple factors, including global commodity prices, trade dynamics and capital flows. The depreciation of currency is likely to increase the import bill, which may impact CAD. On the other hand, depreciation is likely to enhance export competitiveness, which in turn impacts the economy positively. GDP would be impacted through the trade channel, likely imported inflation impacting consumption and investment, etc. Therefore, the overall impact on GDP growth and CAD would depend on the evolving trajectory of various macroeconomic parameters.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 5859
TO BE ANSWERED ON 30.03.2026
IMPLICATION OF FALLING RUPEE VALUE ON INDIAN ECONOMY
5859. Shri K E Prakash:
Will the Minister of Finance be pleased to state:
a. whether the Government has taken note of the continued depreciation of the Indian Rupee against the US Dollar in recent years and the concerns regarding its potential impact on inflation, capital flows and investment in the country, if so, the details thereof;
b. whether the Government has assessed the possible economic implications in the event of further depreciation of the Rupee alongside a sharp increase in global crude oil prices and if so, the details thereof;
c. whether such developments may compel monetary tightening and increase the cost of capital in the economy, if so, the details thereof; and
d. the steps taken or proposed to be taken by the Government to strengthen macroeconomic stability and protect the value of the Rupee?
ANSWER
THE MINISTER OF STATE FOR FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) The Indian Rupee (INR) depreciated against the US Dollar (USD), closing at ₹93.88 per USD on March 24, 2026, with a depreciation of 9.0 per cent in 2025-26 (till March 24, 2026).
The depreciation of currency is likely to enhance export competitiveness, which in turn impacts the economy positively. On the other hand, depreciation may raise the prices of imported goods. However, the overall impact of exchange rate depreciation on domestic prices depends on the extent of the pass-through of international commodity prices to the domestic market. Furthermore, besides exchange rate movements, imports and capital flows are determined by several other factors, including global supply-demand conditions, geopolitical developments, domestic demand, and factors such as global value chain integration necessitating imports of intermediate goods for production and exports, and international prices of imported goods, etc.
Overall, while exchange rate movements have some impact on capital flows and investment, India’s strong macroeconomic fundamentals and diversified sources of investment continue to support stability and sustained capital formation.
(b) and (c): The Government closely tracks the trends in key economic parameters, including movements in the exchange rate, global crude oil prices, monetary aggregates, domestic interest rates etc. These trends are discussed at various forums at various levels of the Government and appropriate action is taken, as may be required, on a regular basis.
(d) At present, the macroeconomic fundamentals of the Indian economy remain strong. Growth continues to be supported by robust domestic demand, moderating inflation, improved corporate balance sheets, and sustained fiscal discipline. Real GDP has consistently grown at over 7 per cent during the last three years. Headline consumer price inflation has eased significantly, averaging 1.9 per cent during 2025-26 (April-February).
The value of the INR is market-determined, with no target or specific level or band. The RBI regularly monitors the foreign exchange market and intervenes in situations of excess volatility. Further, the RBI monitors key developments across the globe which may have an impact on the USD-INR exchange rate. Among others, it includes monetary policy actions of the major Central Banks, major economic data releases across the globe and their impacts thereof, OPEC+ meeting decisions, tracking, and analysing geopolitical events, daily movements in G-10 and EME currencies, etc. The measures taken by RBI to boost forex inflows and to mitigate volatility in the exchange rate, as well as the steps taken to reduce the dependency on hard currencies and increase the acceptability of INR among nonresidents, which in turn may ease the depreciation pressure on INR, include:
i. In February 2026, the revised External Commercial Borrowings framework was introduced, in terms of which the eligibility norms were simplified, the minimum average maturity period was standardised, end-use provisions were eased, and operational flexibility was enhanced (including interest rates).
ii. In October 2025, Authorised Dealer banks in India were permitted to lend in INR to residents of Nepal, Bhutan or Sri Lanka for cross-border trade transactions.
iii. In August and October 2025, surplus balances in Special Rupee Vostro Account were permitted to be invested into Government Securities, non-convertible debentures/bonds, commercial papers, etc.
