Rupee Tumbles 9.88% in FY26, Sharpest Annual Decline in 14 Years

• The Indian rupee depreciated 9.88% against the US dollar in FY26, marking its steepest annual decline in 14 years.
• This depreciation was driven by persistent foreign fund outflows, elevated crude oil prices, a strengthening dollar, and global financial market volatility.
• Unlike FY12's domestic and taper tantrum-led depreciation, FY26's fall was externally driven by oil, geopolitics, and capital flight, amplified by India's import dependence.
• The US tariffs on India and the West Asia conflict further worsened the situation, pushing crude oil prices higher and leading to sustained foreign capital outflows.
• The RBI intervened by selling USD 55.073 billion and introduced a regulatory measure limiting banks' net open positions to curb speculation, aiming to stabilize the currency.