SRINAGAR: The Indian Rupee (INR) has continued its gradual depreciation against the US Dollar (USD), closing at Rs 94.82 per USD on March 27, 2026, according to a statement by the Ministry of Finance in response to a starred question in the Lok Sabha today.
Despite concerns over rising prices of essential commodities, inflation in India has shown a declining trend, reflecting the effectiveness of coordinated fiscal and monetary measures.
The Rupee has weakened consistently over the last five years. At the end of 2021, one USD was equivalent to Rs 74.34, rising sharply to Rs 82.74 in 2022. In 2023, it inched up slightly to Rs 83.21, followed by Rs 85.61 in 2024, and Rs 89.88 in 2025. By March 27, 2026, the Rupee had fallen further to Rs 94.82 per USD. This represents a 9.9 percent depreciation in 2025-26 alone.
The Finance Ministry noted that this decline has been influenced by global developments, including the Middle East conflict starting February 28, 2026, which contributed to a 4.1 percent weakening of the Rupee. Compared with regional peers such as the South Korean Won, Thai Baht, and Philippine Peso, the Rupee’s depreciation has been moderate.
Retail inflation, however, has eased significantly over the same period. Average consumer price index (CPI)-based inflation was 6.2 percent in 2020-21 and dropped to 5.5% in 2021-22. It rose briefly to 6.7 percent in 2022-23 but then moderated to 5.4% in 2023-24 and further to 4.6 percent in 2024-25. In the current year, 2025-26 (April–February), inflation fell sharply to 1.9 percent. Most essential commodities have remained stable, with some even showing decreasing price trends.
While a depreciating currency can make imports costlier, the Finance Ministry emphasized that domestic inflation is shaped by several factors, including global supply-demand dynamics, geopolitical events, and international commodity prices. On the positive side, a weaker Rupee may boost export competitiveness, which could benefit the broader economy.
The government and the Reserve Bank of India (RBI) have been actively monitoring the foreign exchange market. Measures include capping banks’ onshore open positions in USD to limit speculative volatility, revising the External Commercial Borrowings framework to simplify borrowing norms and attract foreign capital, and allowing cross-border trade in INR with Nepal, Bhutan, and Sri Lanka. Surplus balances in Special Rupee Vostro Accounts can now be invested in government securities and other instruments to enhance liquidity.
Simultaneously, fiscal and trade policies have helped manage inflation. These include augmenting buffer stocks of essential food items, strategic grain sales, market intervention in perishable commodities, reduction in fuel taxes, rationalization of GST, and tax exemptions for individuals earning up to Rs 12.75 lakh to increase disposable income.
The Ministry reassured that India’s macroeconomic fundamentals remain robust. Real GDP growth has consistently exceeded 7 percent over the past three years, and unemployment has declined. The easing of headline consumer inflation to 1.9 percent in 2025-26 demonstrates the effectiveness of coordinated policy efforts.
Finance Minister Nirmala Sitharaman concluded that while the Rupee has depreciated, India’s economic resilience, sustained fiscal discipline, and strategic policy measures have mitigated adverse effects, ensuring continued growth and stability
