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GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
RAJYA SABHA
UNSTARRED QUESTION NO. 3590
TO BE ANSWERED ON 24.03.2026
DEPRECIATING RUPEE DESPITE STRONG ECONOMY
3590 Shri Ramji Lal Suman:
Will the Minister of Finance be pleased to state:
(a) whether it is a fact that despite India's strong economy, the value of the Rupee is continuously
falling against the US Dollar;
(b) whether this reflects the paradox of a strong economy;
(c) the details of the growth of the Dollar against the Rupee in the last five years, yearwise; and
(d) the steps taken to strengthen the Rupee, the details thereof?
ANSWER
THE MINISTER OF STATE FOR FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) & (b): At present, the macroeconomic fundamentals of the Indian economy remain strong. Growth
continues to be supported by robust domestic demand, moderating inflation, improved corporate
balance sheets, and sustained fiscal discipline. Real GDP has consistently grown at over 7 per cent
during the last three years. Headline consumer price inflation has eased significantly, averaging 1.9
per cent during 2025-26 (April-February).
Alongside, the exchange rate of the Indian Rupee (INR) against the US Dollar (USD) has witnessed a
depreciation of 7.49 per cent (till March 17, 2026) during 2025-26. This depreciation of the INR has
been influenced by the increase in trade deficit, amid relatively weak support from the capital account.
Additionally, increasing crude oil prices amid the ongoing conflict in the Middle East have added
further pressure on the INR.
The exchange rate is determined by a combination of global and domestic factors such as the
movement of the Dollar Index, trend in capital flows, level of interest rates, movement in crude prices,
current account deficit, etc. These factors may evolve differently from domestic growth conditions.
Therefore, the coexistence of strong economic growth with exchange rate depreciation does not
represent a paradox but rather reflects the distinct drivers influencing the economy and the external
sector.(c): Calendar year (CY) wise percentage depreciation/appreciation of the INR against the USD during
the last five years is given in the table below:
CY Value of INR against USD Appreciation (+) / Depreciation (-)
(as at end of CY) of USD against INR (%)
2021 74.34 -1.7
2022 82.74 -10.2
2023 83.21 -0.6
2024 85.61 -2.8
2025 89.88 -4.8
Source: Bloomberg
(d) The value of the INR is market-determined, with no target or specific level or band. The RBI
regularly monitors the foreign exchange market and intervenes in situations of excess volatility.
Further, the RBI monitors key developments worldwide that may affect the USD-INR exchange rate.
Among others, it includes monetary policy actions of the major Central Banks, major economic data
releases across the globe and their impacts thereof, OPEC+ meeting decisions, tracking, and analysing
geopolitical events, daily movements in G-10 and EME currencies, etc. The measures taken by RBI to
boost forex inflows and to mitigate volatility in the exchange rate, as well as the steps taken to reduce
the dependency on hard currencies and increase the acceptability of INR among non-residents, which
in turn may ease the depreciation pressure on INR, include:
In February 2026, the revised External Commercial Borrowings framework was introduced, in
terms of which the eligibility norms were simplified, the minimum average maturity period
was standardised, end-use provisions were eased, and operational flexibility was enhanced
(including interest rates).
In October 2025, Authorised Dealer banks in India were permitted to lend in INR to residents
of Nepal, Bhutan or Sri Lanka for cross-border trade transactions.
In August and October 2025, surplus balances in Special Rupee Vostro Account were permitted
to be invested into Government Securities, non-convertible debentures/bonds, commercial
papers, etc.
In May 2025, the requirement on Foreign Portfolio Investors to comply with the short-term
investment limit and concentration limit for their investments in corporate debt securities was
withdrawn.
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