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In late March 2026, the Indian rupee broke the 95-level against the US dollar, reaching record lows around 94.8595, and the global pressure was very high. Nevertheless, despite the several interventions made by the RBI, such as selling dollars in the spot market, setting open position limits for banks, and modifying the liquidity levels, the currency kept on depreciating, which constituted one of the worst fiscal performances of the currency in more than ten years, with a close to 9-11% downfall in FY26.

Some of the main triggers are the rising crude oil prices of over 100-110 per barrel and the increase in the conflict between the US and Iran and the possible attack on major shipping routes, which is expanding the trade deficit and the import bill of India. Constant outflow of foreign portfolio investors and high demand of the dollar contributed to the misfortunes.

Analysts have cautioned that a sustained weakness may fuel inflation, raise the prices of loans, and affect the economic growth. Even though RBI intends to make sure that the depreciation process is conducted in orderly fashion as opposed to defending a certain value, the markets are unstable. For importers, exporters, and policymakers, it is an issue that the currency is closely following developments because it is facing numerous headwinds.