New Delhi, April 3 (NationPress) The decline of the Indian rupee following February 27 aligns with trends seen in other global currencies, and in fact, it is performing better than those that saw substantial appreciation in the previous period (from April 2, 2025, to February 27, 2026). This indicates that in a world filled with uncertainty, pushing the boundaries of rupee depreciation as a means of shock absorption has its limits, as noted by SBI Research.

Notably, during the time frame of April 2, 2025, to February 27, 2026, the Indian rupee experienced a depreciation of 6.4 percent. Concurrently, the dollar index recorded a depreciation of 6 percent in the same period.

During this period, while many currencies were appreciating against the dollar, the rupee struggled, suggesting that the premise of utilizing the rupee as a shock absorber may have been overstated, as per the report.

The Reserve Bank of India’s (RBI) efforts to rationalize banks' open positions, although beneficial, have likely resulted in a significant divergence between the onshore and offshore markets.

Indian banks, including both Public Sector Banks (PSBs) and Private Sector Banks (PVBs), generally maintain long positions onshore and short positions offshore, while foreign banks exhibit a contrasting trend.

India's foreign exchange reserves, exceeding $700 billion, are substantial enough to prevent speculative actions and enable the RBI to step in to stabilize the rupee.

The SBI Research report indicated that current reserve levels are equivalent to over 10 months of imports, with short-term debt remaining below 20 percent of reserves. This provides both the capacity and time for market intervention if stabilizing the rupee becomes necessary.

However, the research firm highlighted that fluctuating capital flows and high oil prices present risks to the near-term outlook. It recommended several policy measures, including establishing a special dollar window for oil marketing companies to address a daily demand of $250–300 million.

This strategy aims to enhance visibility into genuine foreign exchange demand and supply dynamics and to assess the effectiveness of various regulatory measures implemented to mitigate unwarranted volatility.

The rupee experienced its most significant single-day gain in almost 13 years on Thursday, closing at 93.10 against the US dollar, as authorities intensified efforts to combat currency speculation. This dramatic increase followed the RBI's tightening of regulations in both domestic and offshore markets.