RBI Holds the Repo Rate, But It’s the Rupee Past ₹95 That Should Worry Businesses

At its June 2026 meeting, the Reserve Bank of India’s Monetary Policy Committee kept the repo rate unchanged at 5.25%, retaining a “neutral” stance. The RBI is projecting GDP growth of around 6.9% for the current fiscal year and expects retail inflation to average near 4.6%. On the surface, that reads as a steady, unremarkable policy update. The more consequential number for most businesses sits elsewhere: the rupee, which has slipped from roughly ₹85.5 to the dollar in early 2025 to past ₹95 by May 2026: a slide of well over 10% in little more than a year, and one of the sharper sustained depreciations the currency has seen in over a decade.

Why the rupee is under pressure

A few forces are compounding each other. Elevated crude prices keep India’s oil import bill high (paid almost entirely in dollars), widening the trade deficit. Foreign portfolio investors have been net sellers of Indian equities and bonds over the past several months, and every block of FPI selling is, mechanically, a block of rupee selling. Tariffs imposed on a range of Indian exports have dented the dollar inflows that would otherwise help offset the import bill. And the US Federal Reserve, having shelved earlier expectations of a rate cut and now openly discussing a hike later this year, has kept the dollar broadly strong against most currencies, not just the rupee.

What this means if you run a business

• Importers and anyone buying input materials, equipment, or services priced in dollars should expect landed costs to keep rising. It’s worth re-costing contracts that were signed when the rupee was meaningfully stronger.
• Exporters get a partial offset from the weaker rupee, but tariff exposure on the other side may cancel much of that benefit out. Net impact depends heavily on which markets and products are involved.
• Businesses with foreign-currency loans (ECBs) or dollar-denominated payables should revisit hedging. A forward contract conversation with your banker is cheap insurance against further depreciation.
• If you’re budgeting in INR for FY27, build a more conservative (weaker) rupee assumption into your cost projections than you might have a year ago.

None of this calls for panic. The RBI has been managing the slide in an orderly way using its reserves, and India’s services exports and domestic demand remain genuine stabilisers. But “the rupee will probably hold near ₹85” is no longer a safe planning assumption for FY27.

General commentary based on publicly available data as of June 2026, not investment, tax, or financial advice specific to your situation. Talk to your advisor before acting on any of it.