New Delhi: The Indian Rupee has continued its gradual depreciation against the US Dollar, reaching Rs 94.82 per USD on March 27, 2026. This trend is occurring even as domestic inflation shows a declining trajectory, according to government data presented in the Lok Sabha.
Rupee Depreciation Trend
Information was available with The Chenab Times detailing the rupee’s consistent weakening over the past five years. At the close of 2021, one US Dollar was valued at Rs 74.34. This figure rose to Rs 82.74 by the end of 2022, Rs 83.21 in 2023, Rs 85.61 in 2024, and Rs 89.88 in 2025. By March 27, 2026, the rupee had further declined to Rs 94.82 against the dollar. The Ministry of Finance reported that this represented a 9.9 percent depreciation specifically in the 2025-26 fiscal period.
The Finance Ministry attributed this sustained depreciation to a confluence of global developments. Among these, a significant Middle East conflict, which commenced on February 28, 2026, contributed to a 4.1 percent weakening of the Indian Rupee. However, compared to regional currencies such as the South Korean Won, Thai Baht, and Philippine Peso, the Rupee’s depreciation has been described as moderate.
Inflationary Trends Ease
Concurrently, retail inflation in India has experienced a notable decline over the same period. Retail inflation, measured by the Consumer Price Index (CPI), averaged 6.2 percent in the 2020-21 fiscal year and subsequently dropped to 5.5 percent in 2021-22. While it saw a brief increase to 6.7 percent in 2022-23, it moderated to 5.4 percent in 2023-24 and further decreased to 4.6 percent in 2024-25. For the current fiscal year, 2025-26, from April to February, inflation fell sharply to 1.9 percent. The Ministry indicated that the prices of most essential commodities have remained stable, with some even exhibiting downward price trends.
The Ministry of Finance acknowledged that a depreciating currency can increase the cost of imports. However, it emphasized that domestic inflation is influenced by a multitude of factors, including global supply and demand dynamics, geopolitical events, and international commodity prices. On a positive note, the government stated that a weaker Rupee could enhance export competitiveness, potentially benefiting the broader Indian economy.
Policy Measures and Economic Outlook
The government and the Reserve Bank of India (RBI) have been actively monitoring the foreign exchange market. A series of measures have been implemented to manage the situation. These include capping banks’ onshore open positions in US Dollars to mitigate speculative volatility. The External Commercial Borrowings framework has also been revised to simplify borrowing norms and attract foreign capital. Furthermore, provisions have been made to allow cross-border trade in Indian Rupees with neighbouring countries such as Nepal, Bhutan, and Sri Lanka. Surplus balances held in Special Rupee Vostro Accounts can now be invested in government securities and other financial instruments to enhance market liquidity.
In parallel, fiscal and trade policies have been deployed to help control inflation. These initiatives include augmenting buffer stocks of essential food items, strategic sales of grains, market interventions for perishable commodities, reductions in fuel taxes, and rationalization of the Goods and Services Tax (GST). Additionally, tax exemptions have been extended to individuals earning up to Rs 12.75 lakh to boost disposable income.
The Finance Ministry conveyed assurance that India’s macroeconomic fundamentals remain robust. Real GDP growth has consistently surpassed 7 percent for the past three consecutive years, and the unemployment rate has shown a declining trend. The significant easing of headline consumer inflation to 1.9 percent in 2025-26 underscores the efficacy of coordinated policy efforts undertaken by the government and the RBI.
Finance Minister Nirmala Sitharaman stated that despite the Rupee’s depreciation, India’s economic resilience, sustained fiscal discipline, and the implementation of strategic policy measures have effectively mitigated potential adverse effects, thereby ensuring continued economic growth and stability.
The Chenab Times News Desk