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, reaching new record lows despite the Reserve Bank of India’s (RBI) best efforts to prop it up. According to a report by SBI Research, the RBI spent a staggering ₹2.7 lakh crore ($30 billion) to help soften the fall of the Indian rupee over the past few months. However, despite this massive intervention, the rupee continued to tumble to new record lows, leaving many to wonder about the effectiveness of the central bank’s strategy.
The report by SBI Research reveals that the RBI intervened in the forex market to the tune of around $18 billion during the period of June-September. Additionally, the research firm estimates that the RBI spent another $10 billion in October 2025, taking the total intervention to $30 billion. This massive infusion of dollars into the market was aimed at preventing a sharp decline in the value of the rupee, which has been under pressure due to a combination of domestic and global factors.
The rupee’s decline can be attributed to a range 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, as investors seek higher returns in the US. The RBI’s intervention in the forex market was aimed at mitigating the impact of these factors and preventing a sharp decline in the value of the rupee.
However, despite the RBI’s best efforts, the rupee continued to decline, reaching new record lows. This has raised questions about the effectiveness of the central bank’s strategy and the sustainability of its intervention in the forex market. The RBI’s intervention in the forex market is aimed at stabilizing the currency and preventing a sharp decline in its value. However, the central bank’s ability to intervene in the market is limited by its foreign exchange reserves, which have been declining in recent months.
The decline in the rupee’s value has significant implications for the Indian economy. A weak rupee makes imports more expensive, which can lead to higher inflation and reduce the competitiveness of Indian exports. The decline in the rupee’s value also makes it more expensive for Indian companies to service their foreign debt, which can lead to a increase in defaults and a decline in investor confidence.
The RBI’s intervention in the forex market is also likely to have a significant impact on the country’s foreign exchange reserves. The central bank’s sale of dollars in the market reduces its foreign exchange reserves, which can make it more difficult for the country to meet its external obligations. The decline in foreign exchange reserves can also lead to a decline in investor confidence, which can exacerbate the decline in the rupee’s value.
In conclusion, the RBI’s intervention in the forex market to prevent a sharp decline in the value of the rupee has been significant, with the central bank spending ₹2.7 lakh crore ($30 billion) to prop up the currency. However, despite this massive intervention, the rupee has continued to decline, reaching new record lows. The decline in the rupee’s value has significant implications for the Indian economy, and the RBI’s ability to intervene in the forex market is limited by its foreign exchange reserves. As such, it is essential for the government and the RBI to take a comprehensive approach to addressing the decline in the rupee’s value, including measures to boost exports, reduce imports, and attract foreign investment.
The RBI’s intervention in the forex market is just one part of a broader strategy to stabilize the currency and promote economic growth. The government and the RBI need to work together to address the underlying factors that are driving the decline in the rupee’s value, including the trade deficit and the decline in foreign investment. This will require a range of policy measures, including reforms to boost exports, reduce imports, and attract foreign investment.
In the short term, the RBI’s intervention in the forex market may help to stabilize the currency and prevent a sharp decline in its value. However, in the long term, the government and the RBI need to take a more comprehensive approach to addressing the decline in the rupee’s value. This will require a range of policy measures, including reforms to boost exports, reduce imports, and attract foreign investment.
Overall, the decline in the rupee’s value is a complex issue that requires a comprehensive approach to address. The RBI’s intervention in the forex market is just one part of a broader strategy to stabilize the currency and promote economic growth. The government and the RBI need to work together to address the underlying factors that are driving the decline in the rupee’s value, including the trade deficit and the decline in foreign investment.
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
