MC EXCLUSIVE FinMin monitoring rupee 'every hour'; geopolitical uncertainties may make currency weaken further

Since the start of 2026, the rupee has depreciated around 2.63 percent against the US dollar.

• Finance ministry monitors rupee-dollar rate hourly amid conflict
• Rupee depreciation may threaten FY27 fiscal deficit target
• Weaker rupee increases fertilizer and LPG subsidy bills

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The finance ministry is monitoring the rupee's level against the US dollar "every hour" to make an assessment of its impact on the economy and the Centre’s fiscal math amidst the ongoing conflict in the Middle East, Moneycontrol has learnt.

The ministry didn't foresee rupee at the 92.33 (record-low hit on Monday) when it made the Budgetary assumptions. It feels if the number crosses 93-a dollar -- and sustains at that level -- the fiscal deficit target of 4.3 percent target for FY27 may become difficult to be met.

"We don't want rupee to cross 93-a-dollar, but it seems it may happen, if the uncertainties don't reduce in a few weeks," an official said.

Since the start of 2026, the rupee has depreciated around 2.63 percent against the US dollar. In 2025, the currency had deprecated around 5 percent.

For FY26, the ministry expects Centre to reach 4.5 percent fiscal deficit as a percentage of GDP, and for FY27, it hopes to reach the target of 4.3 percent.

Government officials say the weaker rupee will push up the fertilizer subsidy bill – which has come already under pressure due to supply chain disruptions, owing to the conflict in the Middle East.

India imports about 30% of its fertilizer requirement. A 1% fall in the rupee adds roughly Rs 1,500-2,000 crore to the subsidy bill if global prices stay high, say analysts.

For FY27, the fertilizer subsidy outlay has been pegged at Rs 170,799 crore. The finance ministry will re-look at the Budget’s numbers after Q1 of FY27, the official said.

For FY26, the Revised Estimate (RE) pegged the fertilizer subsidy at Rs 186,460 crore – which is Rs 18,573 crore higher than the Budget Estimate (BE) for the current financial year.

The depreciating rupee also impacts LPG subsidy. In FY26, the RE (Rs 15,120 crore) was higher than BE by about Rs 3,000 crore. For FY27, the BE has been pegged at Rs 12,084 crore.