RBI explores measures to boost dollar inflows as rupee pressure mounts
Updated
Updated · Reuters · May 4
RBI explores measures to boost dollar inflows as rupee pressure mounts
9 articles · Updated · Reuters · May 4
The rupee is down 5.5% this year, hit a record 95.33 per dollar, and reserves have fallen to $698 billion as equity outflows reached $20.6 billion.
Options under serious consideration include reviving a 2013 non-resident Indian dollar deposit scheme and scrapping a 5% withholding tax on foreign investors in government bonds.
No decision has been taken and any tax change needs government approval. The Iran war, now in its third month, has lifted oil prices and intensified pressure despite RBI market intervention.
As a Mideast war drains India's reserves, can new deposit schemes truly save the rupee from its historic fall?
Beyond attracting dollars, can India’s economy withstand the dual shocks of a new oil crisis and AI disruption?
Indian Rupee Hits Record Low of 95.33/USD Amid Iran Conflict and RBI's Aggressive Intervention
Overview
In May 2026, the Indian rupee hit a record low of 95.33 per US dollar due to two main shocks: the Iran conflict causing a spike in global oil prices, and global risk aversion triggering $20 billion in capital flight from India. Higher oil prices increased India's import bill and current account deficit, creating strong demand for dollars, while capital outflows reduced dollar supply, together pressuring the rupee downward. The RBI responded with market interventions and regulatory measures, which lowered foreign exchange reserves but stabilized the currency. To attract dollar inflows, the RBI is considering reviving an NRI deposit scheme and seeking tax relief on foreign bond investments, while also supporting exporters and promoting the rupee in trade. Despite these efforts, risks remain from reserve vulnerabilities and ongoing external pressures, with the rupee vulnerable to further depreciation and inflationary challenges ahead.