Rupee hits 95.45 per dollar as RBI intervenes to manage crude oil pressure

The Indian Rupee faced intense selling pressure in foreign exchange markets, falling to 95.45 against the US Dollar before the Reserve Bank of India actively intervened by selling foreign currency reserves. The currency depreciation was triggered by rising global Brent crude oil prices, escalating geopolitical volatility in West Asia, and persistent foreign institutional investor capital outflows from domestic financial capital markets.

Exchange rate fluctuations directly impact India's macroeconomic balance because the nation imports over eighty-five percent of its crude oil requirements. A depreciating rupee increases the landed cost of imported crude, exacerbating imported inflation across essential commodities, widening the current account deficit, and placing fiscal stress on state and central budgets that cushion energy pricing for domestic commercial consumers.

To curb excessive exchange rate volatility without artificially pegging the currency, the RBI utilizes its foreign exchange reserves to inject dollars into the interbank currency market. Key macroeconomic metrics show that while foreign exchange reserves remain comfortable, aggressive central bank intervention depletes dollar buffers, increases domestic systemic liquidity tightness, and influences benchmark ten-year sovereign bond yields across banking systems.

For competitive examination aspirants, this development holds immense significance for General Studies Paper Three and Banking exams. Examiners frequently test concepts such as Real Effective Exchange Rate, currency depreciation versus devaluation, RBI's forex management tools, structural causes of Current Account Deficit, and the foreign portfolio investment transmission mechanism on domestic macroeconomic and financial stability.