💰 Economy
Rupee slips past 95 to the dollar again as oil stays costly
In 60 seconds: The rupee closed at 95.18 to the dollar on Monday, its weakest in nearly two weeks, as high oil prices pushed importers to buy dollars. It is weaker than before RBI's 'midnight measures' of 10 October, meant to cap the fall. Support from foreign money that came in for the Jio Platforms IPO has faded. Some large banks also backed off forex swap deals, sensing RBI would not approve.
Why it matters
A weaker rupee makes oil, electronics and foreign education costlier and can push up inflation across the economy.
Explain it simply
If more customers want dollars than there are dollars on offer, each dollar costs more rupees, just like chai gets pricier when milk is scarce.
The 3-minute read
What happened
The rupee moved between 94.90 and 95.26 on Monday and closed at 95.18, against 94.94 the previous day. Brent crude traded around $115 a barrel. Traders expect a range of 95–95.50 in the near term.
Background
Banks had received cheap rupee liquidity after diaspora deposits of about $132 billion in FCNR accounts, which they swapped with RBI. Some used it to buy dollars and invest in US Treasury bills, earning close to 9% through a buy-sell swap.
How it works
Importers keep buying dollars despite costlier hedging, and RBI has not been selling dollars aggressively. Banks pulled back from the swaps after getting 'feelers' that RBI wants that rupee money lent at home instead.
What's next
Analysts expect more RBI steps if the rupee weakens beyond 96.50. Oil prices and foreign investor flows will decide the next move.
What it means for you
Planning foreign travel, study abroad or buying imported gadgets? Costs in rupees are rising. Exporters and families receiving money from abroad gain.
Key numbers
- 95.18: Rupees per dollar at Monday's close
- $115: Brent crude per barrel
- $132 bn: FCNR deposits that flushed banks with rupees
Both sides
- Currency traders: Oil and foreign investor outflows are the two forces pulling the rupee down.
- Some bankers: Swaps also cut hedging costs for importers, so RBI may not oppose them outright.
Key terms explained
- Forex swap
- A deal to buy a currency now and sell it back later at a fixed rate.
- Importers
- Businesses that buy goods from abroad and must pay in dollars.
The story so far
- Oct 2026: RBI's late-night steps to cap the rupee's fall. On 10 October 2026, RBI moved state oil retailers' dollar purchases away from the spot market and tightened hedging rules to stop excess depreciation.
- Today: Rupee closes at 95.18 per dollar
Exam notes (UPSC, SSC, Banking, PSC)
- Depreciation means a fall in a currency's value against another currency in the market.
- FCNR(B) deposits are foreign-currency deposits that non-resident Indians keep with Indian banks.
- Brent crude is a global benchmark price for oil.
- RBI manages the rupee by buying or selling dollars from India's foreign exchange reserves.
Likely exam question: What factors weaken the rupee against the dollar, and what tools does RBI have to respond?