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 for several months now, and despite the Reserve Bank of India’s (RBI) best efforts to prop it up, the currency has continued to tumble to new record lows. According to a report by SBI Research, the RBI spent around ₹2.7 lakh crore ($30 billion) to help soften the fall of the Indian rupee over the past few months. This massive intervention by the central bank, however, has failed to arrest the decline of the rupee, raising questions about the effectiveness of the RBI’s strategy.
The SBI Research report states that the RBI has intervened around $18 billion in the forex market during June-September, and the research firm has estimated that the central bank has spent another $10 billion in October 2025. This brings the total amount spent by the RBI to prevent the rupee from falling to a staggering ₹2.7 lakh crore. The report highlights the RBI’s efforts to stabilize the currency market and prevent a sharp depreciation of the rupee, which could have far-reaching consequences for the Indian economy.
The rupee’s decline has been precipitated by a combination of factors, including a strong US dollar, rising crude oil prices, and a widening trade deficit. The US Federal Reserve’s decision to raise interest rates has also led to a flight of capital from emerging markets, including India, which has put downward pressure on the rupee. Despite the RBI’s intervention, the rupee has continued to fall, touching new record lows against the US dollar.
The RBI’s intervention in the forex market is aimed at preventing a sharp depreciation of the rupee, which could lead to higher import prices, inflation, and a decline in economic growth. The central bank sells dollars from its foreign exchange reserves to buy rupees, which helps to reduce the supply of rupees in the market and prevent a sharp decline in the currency’s value. However, the RBI’s intervention is not a long-term solution to the problem, and the central bank needs to adopt a more sustainable approach to manage the currency market.
The SBI Research report notes that the RBI’s intervention in the forex market has been significant, but it has not been enough to prevent the rupee’s decline. The report suggests that the RBI needs to adopt a more nuanced approach to manage the currency market, taking into account the various factors that are driving the rupee’s decline. The report also notes that the government needs to take steps to reduce the country’s trade deficit and promote exports, which would help to reduce the pressure on the rupee.
The decline of the rupee has significant implications for the Indian economy, including higher import prices, inflation, and a decline in economic growth. A weak rupee makes imports more expensive, which could lead to higher prices of essential goods, including fuel, food, and medicines. This could lead to higher inflation, which would reduce the purchasing power of consumers and affect economic growth. The decline of the rupee could also make Indian exports less competitive, which could lead to a decline in export growth and a widening trade deficit.
The RBI’s intervention in the forex market is a short-term solution to the problem, and the central bank needs to adopt a more sustainable approach to manage the currency market. The government also needs to take steps to reduce the country’s trade deficit and promote exports, which would help to reduce the pressure on the rupee. The decline of the rupee is a complex problem that requires a comprehensive solution, and the RBI and the government need to work together to address the issue.
In conclusion, the RBI’s intervention in the forex market has failed to prevent the rupee’s decline, despite the central bank spending around ₹2.7 lakh crore to prop up the currency. The decline of the rupee has significant implications for the Indian economy, including higher import prices, inflation, and a decline in economic growth. The RBI and the government need to adopt a more nuanced approach to manage the currency market, taking into account the various factors that are driving the rupee’s decline. The government also needs to take steps to reduce the country’s trade deficit and promote exports, which would help to reduce the pressure on the rupee.
News Source: https://www.cnbctv18.com/market/currency/india-rupee-how-many-us-dollars-did-rbi-buy-ws-l-19794895.htm/amp
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