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Key takeaways
The rupee decreased for the first time on Thursday in two days to close at 95.76 per dollar. On Wednesday, the rupee had closed at 95.27. The rupee, which was in regular trading, opened at 95.52 and remained weak all day. Bankers cited continued dollar demand by oil companies together with normal mid-month flows as reasons.
However, said that with rising Iran-US tensions leading to a bout of global risk aversion and fanning a rally in the dollar index and crude oil prices, the local currency faced pressure.
The rupee has become the worst-performing Asian currency in the calendar year 2026. The rupee has fallen more than 6% year-to-date amid a spike in crude oil prices and continuous demand for dollars by oil marketing companies.
The weakness in the rupee raises the costs of importing goods, specifically crude oil. The higher prices for crude oil have a direct impact on prices for petrol, diesel, and LPG. There has been an increase in import duties on gold and silver to 15% from 6%. Petrol and diesel prices will be hiked by ₹3 per litre effective May 15, 2026.
Increased cost of imports will further widen the current account deficit for India. The wider current account deficit puts further pressure on the rupee, and the cycle is difficult to break without the inflow of stable dollar money. For holders of foreign currency loans, the cost of repayment increases with every fall in the rupee.
95.27
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June 11, 2026
Dhaval Shah, who is the founder and Managing Director of De-Risk Forex Consultancy, explained the turnaround on the grounds of geopolitical risks. “While the dollar had softened on the back of the US inflation numbers released yesterday, it turned around due to escalating hostilities between the US and Iran,” said Shah.
But despite the strikes and a breakdown of the ceasefire agreement. We believe that there is no real escalation of the war as reflected by the neutral response of most assets, including oil prices. He also noted that the recent upside correction of the USD/INR pair was a temporary one, with the pair likely to weaken to about 93.50.
The steps taken by the RBI in June 2026 can fetch anywhere between $55 billion and $65 billion in total flows, according to an SBI report. The flows through FCNR(B) can fetch as much as $40 to $45 billion, and the ECB and OFCB swap window may account for $15-$20 billion.
The amount through FCNR(B) was down dramatically from $7.08 billion during FY25 to $946 million during FY26. The June 8 swap window move of the RBI was crucial in this regard, with some offering up to 7.1% on five-year dollar deposits under the new window.
Conclusion
The depreciation of 0.5% in the value of the rupee on June 11, 2026 indicates that any gains from policy changes made due to the structural changes in the system may be undone immediately by the demand for dollars by the oil companies. The RBI's FCNR(B) swaps facility and ECB initiatives will take some time to yield effects.
What will happen if the rupee starts getting stronger against the USD?
The rupee earns value when it takes less rupees to buy a dollar. It has benefits for some consumers and drawbacks for consumers (imports and inflation drop) and companies (exports decline).
How does the rupee fall against the US dollar affect the common man?
This can be disastrous for the general public as prices of essential commodities soar, resulting in inflation and a sharp rise in the cost of living. India imports most of its electronic goods, crude oil in dollars and most other items at fixed prices. It becomes more costly to travel abroad, pursue foreign education, or import raw materials for industry.
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