Lok Sabha Question No. 504 (STARRED), answered on 2026-03-30
Subject: Depreciation Value of Indian Rupee and Rising Inflation
Ministry: FINANCE
Asked by: Shri Shyamkumar Daulat Barve, Shri Dharmendra Yadav

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA STARRED QUESTION NO. 504 ANSWERED ON MARCH 30, 2026

## DEPRECIATION VALUE OF INDIAN RUPEE AND RISING INFLATION

## *504. Shri Shyamkumar Daulat Barve: Shri Dharmendra Yadav:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government is aware that in recent years/times the value of the Indian Rupee has depreciated against the US Dollar and inflation has increased due to rising prices of essential commodities;
- (b) if so, the details of the exchange rate of the Rupee and the rate of inflation during the last five years, year-wise;
- (c) whether the depreciation in the value of the Rupee has had any impact on imported goods and domestic inflation, if so, the details thereof;
- (d) whether the Government is considering any measures or policy to maintain the stability of the Rupee and to control rising inflation, if so, the details thereof;
- (e) whether the Government has conducted any study for the depreciation of the Rupee and if so, the key findings thereof; and
- (f) whether the depreciation of the Rupee has caused any economic loss to the country or has reduced the country's credit worthiness/goodwill and if so, the details thereof?

## ANSWER

THE MINISTER OF FINANCE

(SMT. NIRMALA SITHARAMAN)

- (a) to (f): A statement is laid on the Table of the House.

Statement referred in reply to parts (a) to (f) of the Lok Sabha Starred Question No. 504 raised by Shri Shyamkumar Daulat Barve and Shri Dharmendra Yadav for answer on 30th March 2026, regarding 'Depreciation Value of Indian Rupee and Rising Inflation'

- (a)     The Indian Rupee (INR) depreciated against the US Dollar (USD), closing at ₹94.82 per USD on March 27, 2026, with a depreciation of 9.9 per cent in 2025-26 (till March 27, 2026). Since  the  commencement  of  the  Middle  East  conflict  on  February  28,  2026,  the  INR  has depreciated by 4.1 per cent. However, this depreciation is not specific to INR, as during this period, major Asian currencies have also depreciated. Certain peers such as South Korean Won, Thai Baht and Philippine Peso have declined against the USD more than INR, by 4.6 per cent, 5.5 per cent and 4.8 per cent respectively.

However,  inflation  in  India  has  eased,  with  the  average  retail  inflation  (measured  by  the Consumer Price Index [CPI]) declining from 6.2 per cent in 2020-21 to 4.6 per cent in 202425  and  further  to  1.9  per  cent  in  2025-26  (April-February).  Prices  of  most  essential commodities have remained stable or exhibited a decreasing trend.

- (b)    The details of the exchange rate of INR against USD during the last five years is given below.

| Calendar Year (CY)    | Value of INR against USD (at end of CY)   |
|-----------------------|-------------------------------------------|
| 2021                  | 74.34                                     |
| 2022                  | 82.74                                     |
| 2023                  | 83.21                                     |
| 2024                  | 85.61                                     |
| 2025                  | 89.88                                     |
| 2026 (as on 27 March) | 94.82                                     |
| Source: Bloomberg     | Source: Bloomberg                         |

The average inflation rate based on the Consumer Price Index (CPI) for the last five years is given below.

| Year/Month                                | Average Retail inflation based on CPI* (%)   |
|-------------------------------------------|----------------------------------------------|
| 2020-21                                   | 6.2                                          |
| 2021-22                                   | 5.5                                          |
| 2022-23                                   | 6.7                                          |
| 2023-24                                   | 5.4                                          |
| 2024-25                                   | 4.6                                          |
| 2025-26 (April-Feb)                       | 1.9                                          |
| Source: MoSPI Note: * Based on CPI (2024) | Source: MoSPI Note: * Based on CPI (2024)    |

(c)    The depreciation of currency is likely to enhance export competitiveness, which in turn impacts  the  economy  positively.  On  the  other  hand,  depreciation  may  raise  the  prices  of imported goods. However, the overall impact of exchange rate depreciation on domestic prices depends on the extent of the pass-through of international commodity prices to the domestic market.

Furthermore,  besides  exchange  rate  movements,  imports  are  determined  by  several  other factors,  including  global  supply-demand  conditions,  geopolitical  developments,  domestic demand,  and  factors  such  as global value  chain  integration necessitating  imports  of intermediate goods for production and exports, and international prices of imported goods, etc. Thus,  the  impact  of  exchange  rate  movements  on  imported  goods,  and  hence  on  domestic inflation, cannot be isolated.

(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 across the globe which may have an impact on 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 order to curb the volatility arising from speculative activity in the INR, a day-end limit of USD 100 million on banks' onshore deliverable open positions (unhedged/ uncovered) has been notified on March 27, 2026 thereby capping the open position on INR in the forex market.
-  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.

Further, the Government has undertaken a series of administrative measures, including fiscal and trade policy, to control inflation and mitigate its impact on the common citizen. These include, inter alia ,  augmentation of buffer stocks for essential food items, strategic sales of procured grains in the open market, facilitation of imports and export curbs during periods of short supply, implementation of stock limits to push more supplies of select commodities into the market, retail sales of select food items under the Bharat brand at subsidised rates, market intervention for perishable horticultural and agricultural commodities, reduction in fuel taxes, creation  of  scientific  storage  capacity  and  above  all,  increasing  the  disposable  income  of individuals  by  exempting  annual  incomes  up  to  ₹12  lakh  (and  ₹12.75  lakh  for  salaried individuals with standard deduction) from income tax and the recent rationalization of Good and Services Tax (GST) rates. Concurrently, as part of inflation management, the Monetary Policy Committee (MPC) has also reduced the policy rate by 125 basis points cumulatively since February 2025. These coordinated fiscal and monetary measures have helped manage inflation, while sustaining economic growth above 7 per cent and contributing to a decline in unemployment in recent years.

(e)        The  Government  closely  tracks  the  trends  in  key  economic  parameters,  including exchange  rate  movements,  along  with  their  implications  for  economic  growth  and  fiscal stability. These issues are discussed at various forums at various levels of the Government.

(f)          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. As stated in (a), headline consumer price inflation has also eased significantly.