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 record lows against the US dollar. In an effort to soften the fall, the Reserve Bank of India (RBI) has been actively intervening in the foreign exchange market. According to a report by SBI Research, the RBI spent around ₹2.7 lakh crore ($30 billion) to help stabilize the currency. However, despite these efforts, the rupee continued to tumble to new record lows.
The RBI’s intervention in the forex market is not uncommon, as the central bank often steps in to prevent excessive volatility in the currency market. However, the scale of the intervention this time around is significant. SBI Research reported that the RBI intervened around $18 billion in the forex market during the period of June-September. Additionally, the research firm estimated that the RBI may have spent another $10 billion in October 2025, taking the total intervention to $30 billion.
The RBI’s intervention in the forex market is aimed at preventing a sharp depreciation of the rupee, which could have a negative impact on the economy. A weak rupee makes imports more expensive, which can lead to higher inflation and reduce the competitiveness of Indian exports. The RBI’s intervention helps to reduce the supply of rupees in the market, which in turn helps to prop up the currency.
However, despite the RBI’s best efforts, the rupee continued to fall to new record lows. The currency touched an all-time low of 83.12 against the US dollar in October 2025, sparking concerns about the impact of a weak rupee on the economy. The fall in the rupee is attributed to a combination of factors, including a strong US dollar, high crude oil prices, and a widening trade deficit.
The strong US dollar has been a major factor contributing to the fall in the rupee. The US dollar has been strengthening against most major currencies, including the rupee, due to the US Federal Reserve’s decision to raise interest rates. The higher interest rates in the US have made the dollar more attractive to investors, leading to a surge in demand for the currency.
High crude oil prices have also been a major factor contributing to the fall in the rupee. India is a major importer of crude oil, and a rise in oil prices leads to a higher import bill. This, in turn, puts pressure on the rupee, as the country needs to spend more dollars to import the same amount of oil.
The widening trade deficit has also been a major factor contributing to the fall in the rupee. India’s trade deficit has been widening in recent months, due to a surge in imports and a decline in exports. The trade deficit puts pressure on the rupee, as the country needs to spend more dollars to finance its imports.
The fall in the rupee has significant implications for the Indian economy. A weak rupee makes imports more expensive, which can lead to higher inflation. Higher inflation can reduce the purchasing power of consumers, leading to a decline in demand for goods and services. A weak rupee can also make Indian exports less competitive, leading to a decline in exports.
In conclusion, the RBI’s intervention in the forex market has been significant, with the central bank spending around ₹2.7 lakh crore ($30 billion) to help stabilize the currency. However, despite these efforts, the rupee continued to fall to new record lows. The fall in the rupee is attributed to a combination of factors, including a strong US dollar, high crude oil prices, and a widening trade deficit. The implications of a weak rupee are significant, and the government and the RBI need to take steps to address the underlying factors contributing to the fall in the currency.
The government can take steps to reduce the trade deficit, such as increasing exports and reducing imports. The government can also take steps to reduce the dependence on imported goods, such as promoting domestic manufacturing. The RBI can also take steps to reduce the volatility in the currency market, such as intervening in the forex market and using other monetary policy tools.
In the long run, the government and the RBI need to take steps to address the underlying factors contributing to the fall in the rupee. This includes promoting economic growth, reducing the trade deficit, and promoting domestic manufacturing. The government and the RBI also need to take steps to reduce the dependence on imported goods and promote exports.
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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