New Delhi, April 6 -- The Indian rupee lost 10% against the US dollar in 2025-26, making it one of the worst performances in emerging markets. March alone saw a 4.24% drop, the steepest in any single month in six years, with the rupee briefly breaching the 95 level against the dollar.

To defend the currency, the Reserve bank of India (RBI) sold dollars heavily from its reserves, which fell by $30.5 billion in March. Crude oil at $115 per barrel was adding further strain.

RBI then mounted a bold two-step intervention. It first capped banks' net open rupee positions at $100 million. That led banks to simply transfer their exposure to corporates and hedge funds, which then used the arbitrage between onshore and offshore rates to press furt...