Rupee becomes 2% stronger in last 7 days:After continuous freefall, RBI steps in, takes steps to bolster domestic currency

The rupee has become over 2% stronger after breaching the 95 mark against the US dollar, last week. On Monday, 6 April, 2026, the local unit gained 33 paise to 92.85 against the greenback. The appreciation in the rupee’s value is the result of a slew of measures undertaken by the Reserve Bank of India (RBI) in the recent past. RBI steps in: RBI introduced new restrictions on banks holding foreign currencies: Apex bank had set limits on how much banks can hold foreign currencies overnight. The central bank has capped the net overnight position at $100 million or around ₹940 crore. This rule forced banks to sell some of their dollar reserves, increasing the rupee value. *Net open positions means net exposure of banks into a particular foreign currency which in this case is dollar Restrictions on online dealing of rupee contracts: Authorised Dealers (ADs) can’t offer certain types of deals or contracts of rupee called ‘non-deliverable derivatives’ that involve the Indian rupee. Think of these as bets on the rupee’s value without actually exchanging any real money. *ADs are banks which are assigned by RBI to deal in foreign exchange. Rupee’s performance in 2026: Earlier, the rupee had remained under stress since the beginning of 2026. In December 2025, it breached the 90-per-dollar mark for the first time. Within just 4 months of the new year, it had breached the 95 mark, highlighting mounting pressure on the domestic currency. The local unit had breached the 95 mark in intra-day trade on last Monday. Impact of rupee depreciation Benefits Drawbacks Depreciation makes imports and overseas education costlier A weaker rupee directly raises the cost of imports, impacting everything from crude oil to electronics. It also makes foreign travel and education significantly more expensive. How is currency value determined? When a currency loses value against the US dollar, it is referred to as currency depreciation. A country’s foreign exchange reserves play a crucial role in determining currency strength. These reserves are used for international trade and payments. If dollar reserves decline, the domestic currency weakens. If reserves increase, the currency strengthens. In simple terms, a balance between India’s dollar reserves and foreign demand for the rupee helps maintain currency stability. Any imbalance leads to volatility in the exchange rate.