Depleting war chest
During the pre-war period in FY26, the rupee was allowed to depreciate and find its own level, with little intervention from the RBI. This, however, changed as the Iran war exposed India to one of its worst energy crises. In the first three weeks of March, reserves have declined by about 4.2%, a sharp reversal from gains of 0.7% in February and 3.9% in January. This marks the steepest drawdown since September 2022, when reserves fell during the Russia-Ukraine war shock.
