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, and the Reserve Bank of India (RBI) has been actively intervening in the foreign exchange market to prevent a sharp decline. According to a report by SBI Research, the RBI has spent a staggering ₹2.7 lakh crore ($30 billion) to help soften the fall of the Indian rupee over the past few months. Despite this massive intervention, the rupee continued to tumble to new record lows, leaving many to wonder about the effectiveness of the RBI’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 it is estimated that another $10 billion was spent in October 2025. This brings the total intervention to $30 billion, which is approximately ₹2.7 lakh crore. The report highlights the RBI’s efforts to prevent a sharp decline in the rupee, but also notes that the currency has continued to fall to new record lows despite these efforts.
The rupee’s decline can be attributed to a combination 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 contributed to the rupee’s decline, as it has made investments in the US more attractive, leading to a flight of capital out of emerging markets like India. The RBI’s intervention in the forex market is aimed at preventing a sharp decline in the rupee, which could have a negative impact on the economy, particularly on imports and inflation.
The RBI’s intervention in the forex market involves buying or selling dollars to influence the exchange rate. When the RBI buys dollars, it reduces the supply of rupees in the market, which helps to strengthen the currency. Conversely, when it sells dollars, it increases the supply of rupees, which helps to weaken the currency. The RBI’s intervention is aimed at preventing a sharp decline in the rupee, which could have a negative impact on the economy.
Despite the RBI’s intervention, the rupee has continued to fall to new record lows. This has raised questions about the effectiveness of the RBI’s strategy and whether it is sufficient to prevent a sharp decline in the currency. Some experts have argued that the RBI’s intervention is not enough to stem the decline of the rupee, and that more needs to be done to address the underlying factors contributing to the currency’s decline.
One of the main concerns is that the RBI’s intervention is not addressing the root cause of the problem, which is the widening trade deficit. India’s trade deficit has been rising in recent months, due to a combination of factors, including a surge in imports and a decline in exports. The trade deficit has put pressure on the rupee, as it has led to a increase in demand for dollars to pay for imports. The RBI’s intervention may help to reduce the pressure on the rupee in the short term, but it does not address the underlying issue of the trade deficit.
Another concern is that the RBI’s intervention is not sustainable in the long term. The RBI has limited foreign exchange reserves, and it cannot continue to intervene in the forex market indefinitely. The RBI’s foreign exchange reserves have been declining in recent months, due to the intervention in the forex market. This has raised concerns about the sustainability of the RBI’s strategy and whether it will be able to continue to intervene in the forex market to support the rupee.
In conclusion, the RBI’s intervention in the forex market has not been enough to prevent a sharp decline in the rupee. Despite spending ₹2.7 lakh crore to support the currency, the rupee has continued to fall to new record lows. The RBI’s strategy has raised questions about its effectiveness and whether it is sufficient to address the underlying factors contributing to the currency’s decline. The RBI needs to consider a more comprehensive approach to address the issues facing the rupee, including the widening trade deficit and the strong US dollar.
The RBI’s intervention in the forex market is a short-term solution, and it is not a substitute for a more comprehensive economic strategy. The government needs to take steps to address the underlying factors contributing to the rupee’s decline, including the trade deficit and the strong US dollar. This could involve policies to boost exports, reduce imports, and attract foreign investment. The RBI’s intervention should be seen as a temporary measure to prevent a sharp decline in the rupee, rather than a long-term solution to the currency’s woes.
In the meantime, the RBI will continue to face challenges in managing the rupee’s decline. The central bank will need to balance its intervention in the forex market with the need to maintain sufficient foreign exchange reserves. The RBI will also need to consider the impact of its intervention on the economy, particularly on inflation and interest rates.
As the rupee continues to decline, the RBI will need to be vigilant and take steps to prevent a sharp decline in the currency. The central bank will need to work closely with the government to develop a comprehensive strategy to address the underlying factors contributing to the rupee’s decline. This will involve a combination of monetary and fiscal policies, as well as measures to boost exports and attract foreign investment.
For now, the rupee’s decline is a major concern for the Indian economy, and the RBI’s intervention is a temporary solution to prevent a sharp decline in the currency. The RBI’s strategy has raised questions about its effectiveness, and it is clear that more needs to be done to address the underlying factors contributing to the rupee’s decline.
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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