The Indian rupee has been under pressure in 2026. It moved close to the ₹96-per-dollar level, touching around ₹96.28 in July and staying near ₹96 in September. Recent Reuters reporting showed the rupee around ₹95.8 per dollar in September.
A weaker rupee is not something completely new for India. The currency has gradually depreciated for many years. But what makes the present situation interesting is that several different pressures are coming together at the same time. Foreign portfolio investors have taken money out of Indian markets, oil prices have increased, imports are becoming more expensive, and global trade conditions have become uncertain.
The current account is an important part of this story. It does not explain every movement in the rupee, but it helps us understand how India’s trade in goods and services, income flows, and transfers are affecting the country’s external position.
Why Is the Rupee Under Pressure?
The first thing to understand is that the rupee does not move against the dollar for only one reason.
The demand for dollars from Indian importers is an important factor. India imports large quantities of crude oil, and when oil prices rise, Indian companies need more dollars to pay for those imports. That increases demand for the US currency and can put pressure on the rupee.
The World Bank reported that the rupee had already fallen to around ₹95 per dollar by the end of March 2026. It linked the pressure partly to large foreign portfolio outflows and financial-market volatility. The World Bank also said net FPI outflows had reached about $6.2 billion during April-January of FY26.
There is another issue — foreign investors. When investors sell Indian shares and take their money out of the country, they generally need to convert rupees into foreign currency. Large outflows can therefore add pressure to the rupee. The situation is also connected to global events. The dollar remains an important international currency, while changes in US interest rates, oil prices and geopolitical tensions can influence the movement of Asian currencies. This is why looking only at the ₹96-per-dollar number does not tell the complete story.
The Current Account Is the Missing Part of the Story
A country’s current account records important transactions with the rest of the world. It includes trade in goods, services, income flows and transfers such as remittances.
India normally has a large merchandise trade deficit because it imports more goods than it exports. However, India also earns a large amount from services, particularly information technology and other business services. Remittances from Indians working abroad are another important source of foreign exchange.
According to the RBI, India’s current account deficit in the first quarter of FY2026-27 was $4.2 billion, equal to 0.5% of GDP. The merchandise trade deficit was much larger at $86.1 billion, but this was partly offset by a net services surplus of $51.6 billion and other receipts. This is an important point. A large merchandise trade deficit does not automatically mean that the overall current account is equally large. India’s services exports and remittances help reduce the gap. The World Bank had earlier reported that India’s current account deficit was around 1% of GDP during the first three quarters of FY26, lower than 1.3% during the same period of the previous year. It said strong remittances and a larger services surplus helped compensate for the widening merchandise trade deficit.
So the current account is not necessarily a crisis by itself. The bigger question is whether the deficit can be comfortably financed while the country is also facing capital outflows and expensive imports.
Oil, Imports and the Rupee Connection
One of the biggest pressures on India’s external accounts comes from energy imports. India imports a very large share of the crude oil it consumes. When international oil prices rise, the country’s import bill rises too. If the rupee is also falling against the dollar, the cost becomes even higher in rupee terms.
Recent data show how quickly this can happen. Between April and August 2026, India’s crude oil import bill rose by about 48.4% to $74.8 billion, according to Financial Express. The increase came even though the volume of crude imports fell slightly, because the price of oil was much higher. The report also noted that the rupee’s depreciation added to the cost in domestic currency. This creates a difficult cycle. Higher oil prices can increase India’s dollar demand. More dollar demand can put pressure on the rupee. A weaker rupee then makes dollar-priced imports more expensive in India.
At the same time, exports can become more complicated. A weaker currency can make Indian goods cheaper for foreign buyers in rupee terms, but this advantage can be reduced if exporters have to pay more for imported raw materials or face higher tariffs in important markets.
Trade tensions therefore matter too. The United States has introduced different tariff measures affecting Indian exports during 2026, and the tariff structure has changed during the year. This makes the original claim of a continuing 50% tariff too simple for a September 2026 article. The result is that the rupee story cannot be separated from India’s import bill, especially its energy bill.
Why the Rupee-Pakistan Comparison Is Getting Attention
One of the more unusual parts of the currency story is the movement between the Indian and Pakistani rupees. In May 2025, one Indian rupee was worth around 3.3 Pakistani rupees. By September 2026, the rate was around 2.89 Pakistani rupees for one Indian rupee. This means the Indian rupee has lost roughly 12–13% of its value against the Pakistani rupee over that period. However, this needs to be explained carefully.
It does not mean that the Pakistani rupee is now stronger than the Indian rupee overall. One Indian rupee still buys nearly three Pakistani rupees. The comparison simply shows that the two currencies have moved differently against the dollar over this period. Pakistan’s currency had gone through a severe period of pressure earlier, but the situation later became more stable under its IMF-supported economic programme. The IMF reported that Pakistan’s rupee had remained broadly stable at around 280 Pakistani rupees per US dollar and that foreign-exchange reserves had improved.
That makes the India-Pakistan currency comparison interesting, but it should not be treated as proof that India’s economy is in a similar position to Pakistan’s. Their economic structures, external financing needs and policy situations are very different.
For India, the more important question is what is happening underneath the exchange rate. The country still has strong services exports, large remittance inflows and substantial foreign-exchange reserves. But it also has a large merchandise trade deficit, high dependence on imported energy and continuing exposure to global capital flows. So the current account deserves more attention than a simple headline about the rupee touching ₹96.
The rupee’s fall is the visible part. Behind it are trade, oil, investment flows, services earnings, and global uncertainty. Understanding these factors gives a clearer picture of why the Indian currency is under pressure in 2026.
References:
- Reserve Bank of India — India’s Balance of Payments, Q1 FY2026-27. RBI — Balance of Payments Q1 FY2026-27 https://ltnr.ca
- World Bank — India Development Update, April 2026. World Bank — India Development Update https://thedocs.worldbank.org
- Reuters — Indian rupee and market conditions, September 2026 Reuters — Indian rupee market report https://www.reuters.com
- Financial Express — India’s crude oil import bill, April-August 2026 Financial Express — Crude oil import bill https://www.financialexpress.com
- IMF — Pakistan’s economic stabilisation and exchange rate IMF — Pakistan economic review 2026 https://www.elibrary.imf.org
- Reuters — US-India tariff changes in 2026. Reuters — US tariffs on Indian goods https://www.reuters.com