Rupee tops Asia’s worst performers list with 9.9% slide in FY26
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Why in news
The Indian rupee recorded a 9.9% slide in FY26, becoming one of Asia's worst-performing currencies due to a record ₹1.6 lakh crore withdrawal by foreign portfolio investors.
Background
The Indian rupee fell to cross the 95 mark against the dollar on the last day of trading in FY26. The Japanese yen was the second worst-performing Asian currency, falling 6.27% against the dollar.
Facts for Prelims
- FactThe Indian rupee depreciated by 9.9% against the dollar in FY26.
- FactForeign portfolio investors withdrew a record ₹1.6 lakh crore from India in FY26.
- FactThe Japanese yen fell 6.27% against the dollar in FY26.
- BodyThe Reserve Bank of India (RBI) intervened by selling dollars and capping banks' net open positions.
For Mains
Q. Analyze the factors contributing to the volatility of the Indian rupee and evaluate the effectiveness of RBI's intervention mechanisms in maintaining exchange rate stability.
Dimensions to cover in your answer
- Capital flight: Impact of record ₹1.6 lakh crore foreign portfolio investor withdrawals on currency stability
- Monetary intervention: Effectiveness of capping banks' net open positions vs. market-driven depreciation
- External vulnerability: Correlation between foreign investment flows and rupee depreciation against the dollar
Keywords: Exchange rate volatility · Foreign Portfolio Investment (FPI) · Monetary intervention · Capital flight · Currency depreciation
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