According to RBI's latest monetary policy report, the depreciation pressures in INR accentuated at the tail end of H2, breaching its previous record lows amidst concerns over West Asia conflict. The INR appreciated from early February 2026 on the announcement of interim India-US trade deal agreement, but depreciated in March as the conflict in West Asia intensified. The Indian rupee (INR) exhibited two-way movements with a depreciating bias on the back of persistent FPI outflows, elevated corporate dollar demand and rise in global risk-off sentiments in H2. In March, however depreciation pressures accentuated with the INR breaching ₹95 per US dollar intraday, surpassing its previous record lows amid concerns over West Asia conflict, the central bank noted. In order to ensure orderly conditions in the foreign exchange market, the Reserve Bank introduced a prudential measure on March 27, 2026 that limited the net open position in INR (NOP-INR) of authorised dealers in the onshore deliverable market to within US$ 100 million at the end of each business day. This was aimed at curbing excessive speculative positioning and mitigating systemic risks. Overall, the INR depreciated by 6.2 per cent against the US dollar in H2. However, despite heightened volatility in global market, the INR remained among the least volatile EM currencies during this period, supported by modest current account deficit and robust foreign exchange reserves. Taking into account the volatility of the US dollar and fluctuations in global capital flows, the baseline assumption for the exchange rate has been revised to ₹94 per US dollar as against ₹88 in the October 2025 MPR.