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 the past few months, and despite the Reserve Bank of India’s (RBI) best efforts to stem the fall, it has continued to tumble to new record lows. According to a report by SBI Research, the RBI has spent a whopping ₹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 not been enough to prevent the rupee from falling to record lows.
The RBI’s intervention in the foreign exchange market is aimed at preventing a sharp depreciation of the rupee, which can have a negative impact on the economy. A weak rupee can make imports more expensive, leading to higher inflation and a wider trade deficit. To prevent this, the RBI sells dollars from its foreign exchange reserves to buy rupees, thereby reducing the supply of rupees in the market and propping up its value.
According to SBI Research, the RBI has intervened around $18 billion in the forex market during June-September, and an estimated $10 billion in October 2025. This brings the total intervention by the RBI to around $30 billion, or ₹2.7 lakh crore. Despite this massive intervention, the rupee has continued to fall, reaching new record lows against the US dollar.
The rupee’s fall can be attributed to a combination of factors, including a strong US dollar, rising crude oil prices, and a widening trade deficit. 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. This has led to a flight of capital from emerging markets, including India, to the US, where returns are higher.
Rising crude oil prices have also put pressure on the rupee, as India is a major importer of oil. A weak rupee makes oil imports more expensive, leading to higher inflation and a wider trade deficit. The trade deficit has been widening due to a combination of factors, including a rise in imports and a decline in exports.
The RBI’s intervention in the forex market has helped to slow down the fall of the rupee, but it has not been enough to prevent it from falling to record lows. The rupee has fallen by around 10% against the US dollar so far this year, making it one of the worst-performing currencies in Asia.
The fall of the rupee has significant implications for the Indian economy. A weak rupee can make imports more expensive, leading to higher inflation and a wider trade deficit. This can also make it more difficult for Indian companies to compete in the global market, as their exports become more expensive.
The RBI’s intervention in the forex market is a short-term solution to prevent a sharp depreciation of the rupee. However, it is not a long-term solution to the problem. To prevent a further fall of the rupee, the government needs to take steps to reduce the trade deficit and promote exports. This can be done by implementing policies to boost manufacturing and exports, such as reducing tariffs and improving infrastructure.
In conclusion, the RBI’s intervention in the forex market has not been enough to prevent the rupee from falling to record lows. Despite spending ₹2.7 lakh crore to soften the fall of the rupee, the currency has continued to tumble. The government needs to take steps to reduce the trade deficit and promote exports to prevent a further fall of the rupee. This can be done by implementing policies to boost manufacturing and exports, such as reducing tariffs and improving infrastructure.
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