Rupee Hits Record Low, RBI Interventions Cost $14.8 Billion
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Currency volatility and forex reserve management: a key GS3 Economy and Monetary Policy topic.
Why in news
RBI Deputy Governor Poonam Gupta suggested the rupee's depreciation since March 2025 might be a temporary overcorrection of up to 13% despite a negative balance of payments.
Background
The Indian rupee hit a record low in May 2026 before experiencing a brief recovery and subsequent depreciation. RBI interventions to stabilize the currency resulted in a reduction of foreign exchange reserves by $14.8 billion.
Facts for Prelims
- FactRBI interventions led to a reduction of $14.8 billion in reserves.
- FactThe rupee's depreciation since March 2025 was estimated by the RBI to be an overcorrection of up to 13%.
- FactThe rupee hit a record low in May 2026.
Prelims practice question
What was the estimated percentage of the rupee's depreciation since March 2025 as suggested by the RBI?
- (a)20%
- (b)10%
- (c)15%
- (d)13%
Show answer
Answer: (d) 13% — The RBI suggested the rupee's depreciation since March 2025 might be a temporary overcorrection of up to 13%.
For Mains
Q. Analyze the impact of a depreciating currency on India's balance of payments and the role of central bank interventions in managing exchange rate volatility.
Dimensions to cover in your answer
- Reserve depletion: Trade-off between maintaining forex stability and preserving national reserves
- External pressure: Impact of a strengthening US dollar on India's trade deficit and capital flows
Keywords: Exchange rate volatility · Balance of Payments · Foreign Exchange Reserves · Monetary Policy · Currency Depreciation
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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.