Why the rupee is falling faster now: MoS Finance flags crude surge, trade deficit as key drivers

It took 2,149 working days for the rupee to depreciate from a level of 45 against the US dollar on 31 July 2000 to 50 against the US dollar on November 20, 2008. In contrast, the depreciation of the Indian currency to 92 against the US greenback on March 4, 2026, from 90 on December 3, 2025, took 60 working days.

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The information was shared by Minister of State for Finance Pankaj Chaudhary in Lok Sabha on Monday in response to a question on the decline in the value of the rupee. On March 23, the rupee touched a new all-time low of 93.92 against the US dollar.

The minister said that during the current financial year 2025-26, the depreciation of the INR has been influenced by the increase in trade deficit, amid relatively weak support from the capital account.

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"Additionally, increasing crude oil prices amid the ongoing conflict in the Middle East have added further pressure on the INR," he said.

“The Indian rupee (INR) first breached ₹91 per US Dollar (USD) on December 16, 2025. It closed at ₹92.43 per USD on March 16, 2026,” the minister said in response to the question on the rupee breaching the level of 91 per US dollar.

“The value of the INR is market-determined, with no target or specific level or band,” the minister said, adding that the Reserve Bank of India (RBI) regularly monitors the foreign exchange market and intervenes in situations of excess volatility.

Various domestic and global factors influence the exchange rate of the INR, such as the movement of the Dollar Index, trend in capital flows, level of interest rates, movement in crude prices, and current account deficit, he further said.

In calendar year 2025, the RBI net sold $51,714 million as part of its exchange market interventions, which was nearly four times the $12,350 million it sold in 2024. In 2023, the RBI net sold $18,135 million, the minister said.

He further informed the House that 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,” he said, adding that the overall impact of exchange rate depreciation depends on the extent of the pass-through of international commodity prices to the domestic market.