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 quite some time now, and despite the Reserve Bank of India’s (RBI) best efforts to intervene and stabilize the currency, it 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, however, has failed to arrest the decline of the rupee, raising concerns about the effectiveness of the central bank’s strategy.
The SBI Research report states that the RBI has intervened around $18 billion in the forex market during the period of June-September, and an estimated additional $10 billion in October 2025. This brings the total intervention to $30 billion, or approximately ₹2.7 lakh crore. The report highlights the RBI’s efforts to prop up the rupee, but also notes that despite these efforts, the currency has continued to decline, reaching new record lows.
The decline of the rupee has been a major concern for the Indian economy, as it makes imports more expensive and can lead to higher inflation. The RBI has been trying to manage the currency’s decline by intervening in the forex market, but its efforts have been met with limited success. The rupee has been under pressure due to a combination of factors, including a strong US dollar, rising crude oil prices, and a widening trade deficit.
The RBI’s intervention in the forex market is aimed at reducing the volatility of the rupee and preventing it from depreciating too rapidly. 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 prop up the currency. However, this strategy has its limitations, and the RBI’s intervention has not been enough to stem the decline of the rupee.
The SBI Research report notes that the RBI’s intervention has been significant, but it has not been enough to offset the downward pressure on the rupee. The report states that the RBI has been using its foreign exchange reserves to intervene in the market, but the decline of the rupee has been too rapid, and the central bank’s efforts have not been enough to keep pace.
The decline of the rupee has significant implications for the Indian economy. A weak rupee makes imports more expensive, which can lead to higher inflation. This can have a negative impact on consumer spending and economic growth. Additionally, a weak rupee can 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 manage the decline of the rupee. However, the central bank needs to consider long-term strategies to strengthen the currency and reduce its dependence on foreign capital. This could include measures such as increasing exports, reducing the trade deficit, and promoting foreign investment.
In conclusion, the RBI’s efforts to intervene in the forex market and prevent the decline of the rupee have been significant, but they have not been enough to stem the decline of the currency. The rupee has continued to tumble to new record lows, despite the central bank’s intervention. The RBI needs to consider long-term strategies to strengthen the currency and reduce its dependence on foreign capital. The decline of the rupee is a complex issue, and it requires a comprehensive approach to address the underlying factors that are driving its decline.
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
