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Rupee at 10%+ Depreciation, REER Falls to 90.96; RBI Considers $50-60 Billion FCNR(B)-style Fundraising Amid Net FDI Outflow of (-)$18.4 Billion

EconomyHIGH
Target:UPSC GS-IIIMPSCBankingSSC GATeachingPrelims HighMains HighStatic GK Link
03 Jun 2026
~2 min
Source: Indian Express
Key Data:REER 90.96(-)$18.4 Billion Net Inflow$26 Billion (2013 FCNR(B))$50-60 Billion (Potential Need)>10% Depreciation
Bodies:RBIMPC
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What This Article Covers

1.The RBI's Monetary Policy Committee is meeting amid pressure on the rupee, which has fallen over 10% against the USD in a year, with its REER hitting 90.96 in April.

2.Policy options under discussion include a rate hike (like 2013) or a large deposit mobilisation scheme (like FCNR(B)), with economists suggesting at least $50-60 billion is needed now.

3.The rupee's weakness is linked to a structural shift from 'push' factors (low global interest rates pre-2022) to 'pull' factors (need for domestic private capex), with net FDI and FPI inflows at (-)$18.4 billion since April 2024.

The Big Picture
Prelims · HighMains · High

The RBI is grappling with a weak rupee, depreciated over 10% against the dollar, as net FDI inflows turn negative. While the MPC is expected to hold rates, debates center on whether to raise interest rates or launch a large-scale foreign currency deposit scheme reminiscent of 2013's FCNR(B) drive, potentially needing $50-60 billion to change market sentiment.

Exam Lens

Quick Exam Facts From News

Rupee Depreciation (1Y)>10% vs US Dollar
REER (April 2026)90.96 (Lowest since Sep 2013)
Net FDI+FPI Inflow (Apr 2024+)(-)$18.4 Billion
Potential Fundraising$50-60 Billion

1-Minute Revision

  • ›Rupee Depreciation (1Y): >10% vs US Dollar
  • ›REER (April 2026): 90.96 (Lowest since Sep 2013)
  • ›Target this Data: REER value of 90.96 in April 2026 (lowest since Sept 2013).
  • ›Target this Nodal Body: Reserve Bank of India's Monetary Policy Committee (MPC).
  • ›Target this Scheme: Foreign Currency Non-Resident (Bank) Deposits - FCNR(B) scheme of 2013.

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Practice exam-style questions, track your score, and strengthen your recall.

Q1Static LinkageEasy

Which committee of the RBI is primarily responsible for deciding the policy repo rate?

Q2Statement-basedMedium

Consider the following statements regarding the Indian Rupee's situation as discussed in the article:

1. The Real Effective Exchange Rate (REER) falling to 90.96 indicates the rupee is roughly 9% undervalued.

2. The RBI successfully defended the rupee in 2013 primarily by raising interest rates.

3. Net inflows from Foreign Direct Investment and Foreign Portfolio Investors into India have been positive since April 2024.

Which of the statements given above is/are correct?

Q3Data-centricMedium

According to the article, what was the approximate amount of foreign capital raised by India through the FCNR(B) scheme in 2013?

Q4Application/ImpactHard

What is the primary lesson, as per economists cited, from the failure of interest rate hikes to defend the rupee in 2013?

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