RBI has historically possessed a remarkable 'Break glass in case of emergency' toolkit. In 1998, faced with post-Pokhran sanctions, it launched Resurgent India Bonds (RIBs) and raised $4.2 bn. In 2000, India Millennium Deposits (IMDs) brought in $5.5 bn. And in 2013, during the 'taper tantrum', FCNR(B) swap window attracted over $30 bn, single-handedly arresting a 14% rupee freefall.
Today, with rupee breaching 96 to dollar, oil above $100 and CAD widening, whispers of a similar 'bazooka' are growing louder in policy circles. The temptation is understandable. But the global interest rate environment of 2026 has blunted this toolkit. Raising rates is no longer a policy option but a policy imperative.
