Current Affairs June 2026 – Monthly Compilation

June was an external-sector month. The Monetary Policy Committee left the repo rate at 5.25%, but the more consequential news came alongside it: a package aimed at supporting the rupee, a tax exemption for foreign investors in government securities, and a rare current account surplus.

Economy

RBI monetary policy

The MPC, chaired by Governor Sanjay Malhotra, kept the repo rate unchanged at 5.25%, with the Standing Deposit Facility, Marginal Standing Facility and Bank Rate also unchanged, and continued with a neutral stance — a second successive hold after February.

Measures to support the rupee

At the 5 June 2026 policy the Reserve Bank announced steps designed to attract foreign currency inflows rather than to spend reserves defending the currency:

• The RBI would fully subsidise the foreign-exchange hedging cost for banks raising fresh FCNR(B) deposits of three to five years. FCNR(B) is the Foreign Currency Non-Resident (Bank) deposit — held in foreign currency, so the depositor carries no rupee risk.
• A concessional foreign-exchange swap facility to encourage public sector enterprises to raise External Commercial Borrowings (ECBs).
• Foreign institutional investors and the Bank for International Settlements were exempted from income tax on interest from government securities and on capital gains from trading them.

Read together the story is coherent: a current account surplus and rising reserves despite a net capital outflow, which is exactly why the RBI courted inflows through FCNR(B) and ECB incentives rather than intervening more heavily in the spot market.

Persons in News

Sanjay Malhotra, Governor of the Reserve Bank of India, chaired the June Monetary Policy Committee. As Governor he is ex officio chairman of the MPC, which has six members — three from the RBI and three external members appointed by the government — and holds a casting vote in the event of a tie.

Abbreviations

Quick revision

1. Repo held at 5.25%, stance neutral, MPC chaired by Governor Sanjay Malhotra.
2. RBI to fully subsidise FX hedging costs on fresh 3-5 year FCNR(B) deposits.
3. Concessional FX swap facility to push PSUs towards ECBs.
4. FIIs and the BIS exempted from income tax on g-sec interest and capital gains.
5. Q4 FY26: current account surplus 0.7% of GDP, capital account outflow USD 1.1 billion, reserves up USD 7.2 billion.