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 role of central bank interventions in managing currency volatility and the implications of depleting foreign exchange reserves on India's external stability.
Dimensions to cover in your answer
- Reserve management trade-off: Balancing immediate currency stabilization against long-term buffer requirements for external shocks
- Macroeconomic pressure: Impact of a strengthening US dollar on India's balance of payments and import costs
Keywords: Currency Depreciation · Foreign Exchange Reserves · Balance of Payments · Monetary Intervention · Exchange Rate Volatility
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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.