RBI spent ₹2.7 lakh cr to prevent rupee from falling, it still fell to record lows: Report
The Indian rupee has been on a downward spiral in recent months, touching new record lows against the US dollar. In an effort to soften the fall, the Reserve Bank of India (RBI) has spent a significant amount of money to intervene in the foreign exchange market. According to a report by SBI Research, the RBI spent around ₹2.7 lakh crore ($30 billion) to help prevent the rupee from falling further. However, despite the central bank’s intervention, the rupee continued to tumble to new record lows.
The RBI’s intervention in the foreign exchange market is not a new phenomenon. The central bank has been actively involved in managing the exchange rate to prevent excessive volatility and maintain stability in the currency market. However, the scale of the intervention this time around is significant, with the RBI spending a whopping ₹2.7 lakh crore to buy US dollars and prevent the rupee from falling.
According to SBI Research, the RBI intervened around $18 billion in the forex market during the period of June-September. The research firm has estimated that the RBI intervened another $10 billion in October 2025, taking the total intervention to around $30 billion. This is a significant amount, and it highlights the extent to which the RBI is willing to go to prevent the rupee from falling further.
The RBI’s intervention in the foreign exchange market is aimed at preventing excessive speculation and maintaining stability in the currency market. When the RBI buys US dollars, it helps to reduce the supply of rupees in the market, which in turn helps to prevent the rupee from falling further. However, the RBI’s intervention is not a permanent solution, and it can only provide temporary relief to the currency market.
Despite the RBI’s intervention, the rupee continued to fall to new record lows. This is because the fundamental factors that are driving the fall of the rupee are still in place. The US dollar has been strengthening against most currencies, including the rupee, due to the hawkish stance of the US Federal Reserve. The Fed has been raising interest rates to combat inflation, which has made the US dollar more attractive to investors.
Additionally, the Indian economy is facing several challenges, including a widening trade deficit and a slowdown in economic growth. The trade deficit has been widening due to the increase in imports, particularly of crude oil, which has put pressure on the rupee. The slowdown in economic growth has also reduced the attractiveness of the Indian economy to foreign investors, which has further put pressure on the rupee.
The fall of the rupee has significant implications for the Indian economy. A weaker rupee makes imports more expensive, which can lead to higher inflation. It also makes it more difficult for Indian companies to compete in the global market, as their exports become more expensive. The fall of the rupee can also lead to a decrease in foreign investment, as investors become wary of investing in a country with a weak currency.
In conclusion, the RBI’s intervention in the foreign exchange market has not been able to prevent the rupee from falling to new record lows. The fundamental factors that are driving the fall of the rupee are still in place, and the RBI’s intervention can only provide temporary relief to the currency market. The Indian government and the RBI need to take more decisive action to address the underlying issues that are driving the fall of the rupee. This includes reducing the trade deficit, promoting exports, and attracting more foreign investment.
The RBI’s intervention in the foreign exchange market is a short-term solution, and it is not a substitute for more fundamental reforms. The Indian government needs to take more decisive action to promote economic growth, reduce the trade deficit, and attract more foreign investment. Only then can the rupee be expected to stabilize and start appreciating against the US dollar.
News Source: https://www.cnbctv18.com/market/currency/india-rupee-how-many-us-dollars-did-rbi-buy-ws-l-19794895.htm/amp
About the Author
