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 record lows against the US dollar. In an effort to soften the fall, the Reserve Bank of India (RBI) has intervened in the foreign exchange market, spending a significant amount of money to prop up the currency. 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 this massive intervention, the rupee continued to tumble to new record lows.
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 central bank may have spent another $10 billion in October 2025, taking the total intervention to $30 billion. This is a significant amount, and it highlights the extent to which the RBI is willing to go to support the rupee.
The RBI’s intervention in the forex market is aimed at preventing a sharp depreciation of the rupee, which could have far-reaching consequences for the Indian economy. A weak rupee makes imports more expensive, which could fuel inflation and hurt economic growth. Moreover, a sharp decline in the value of the rupee could also lead to a loss of investor confidence, which could have negative implications for the country’s financial markets.
Despite the RBI’s best efforts, the rupee continued to fall to new record lows. This raises questions about the effectiveness of the central bank’s intervention in the forex market. While the RBI’s actions may have helped to slow down the decline of the rupee, they have not been able to prevent it from falling to new lows.
There are several factors that have contributed to the decline of the rupee, 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 strengthening of the US dollar, which has put pressure on emerging market currencies like the rupee.
The RBI’s intervention in the forex market is not without its costs. The central bank has to use its foreign exchange reserves to buy dollars and sell rupees, which can lead to a depletion of its reserves. This could limit the RBI’s ability to respond to future shocks, and it could also lead to a decline in investor confidence.
The decline of the rupee is also having a significant impact on the Indian economy. A weak rupee makes imports more expensive, which could lead to higher prices for consumers. This could fuel inflation, which is already a concern for policymakers. Moreover, a weak rupee could also make it more difficult for Indian companies to compete in the global market, which could hurt exports and economic growth.
In conclusion, the RBI’s intervention in the forex market has not been able to prevent the rupee from falling to new record lows. While the central bank’s actions may have helped to slow down the decline of the rupee, they have not been able to reverse the trend. The decline of the rupee is a complex issue, and it will require a comprehensive response from policymakers. This could include measures to boost exports, reduce imports, and attract more foreign investment.
The RBI’s intervention in the forex market is just one part of a larger strategy to support the rupee. The government and the central bank will need to work together to address the underlying factors that are contributing to the decline of the rupee. This could include measures to reduce the trade deficit, boost economic growth, and attract more foreign investment.
As the rupee continues to fall to new record lows, it is clear that the RBI’s intervention in the forex market is not a long-term solution. The central bank’s actions may have helped to slow down the decline of the rupee, but they have not been able to prevent it from falling further. The government and the RBI will need to take a more comprehensive approach to address the decline of the rupee, and to support the Indian economy.
The report by SBI Research highlights the challenges that the RBI is facing in its efforts to support the rupee. The central bank’s intervention in the forex market is a complex issue, and it requires a careful balance between competing objectives. The RBI will need to weigh the benefits of intervening in the forex market against the potential costs, including the depletion of its foreign exchange reserves.
As the Indian economy continues to face challenges, the decline of the rupee is a major concern for policymakers. The RBI’s intervention in the forex market is just one part of a larger strategy to support the economy, and it will require a comprehensive approach to address the underlying factors that are contributing to the decline of the rupee.
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