MUMBAI: The rupee, which has been under tremendous pressure since October 2024 when it was trading 84 to a dollar and has since plumbed many life-time lows, including hitting the worst at 89.61 last Friday, has seen the Reserve Bank heavily intervening in the spot market. The monetary authority has sold a whopping $38 billion during the first nine months of 2025 to defend the rupee, which has lost 4.26 percent year to date and is the worst among its Asian peers--the highest in the past three years.
While the RBI sold a record $37.99 billion in the January-September period— the highest for any nine months since 2022, the selloff was in during the January-September 2022 period when it had sold as much as $58.255 billion to defend the currency. On Wednesday, the rupee closed nearly flat with gaining 2 paise to 89.23 to the greenback. On November 21, the rupee sank to a new low of 89.46 on high demand and low support from the RBI after hitting 89.61 and many analysts are expecting the unit to plumb below 90 sooner than later.
The pressure on the rupee began with Donald Trumps near certain return to the White House (which he did in the November 2024 elections) and resultant fears about his economic and trade protectionism. The other reasons for the pain on the rupee are many, including the heavy outflows from domestic equities as foreign investors have taken out more than $17 billion this fiscal alone (have pulled out more than Rs 3 trillion since October last year after having pumped up the markets a life-time high time in late September), the lingering global trade uncertainties including the tariff wars and the resultant impact on current account balance, the many geopolitical skirmishes among others.
The heavy intervention shows the central bank’s presence in the currency market, despite the official position being having no level for the currency but to curb excessive volatility. Many analysts said the mild recovery of the rupee since Monday is clearly because short-sellers are afraid of another Friday like intervention when the rupee suddenly breached the 88.80 level as short-sellers got weary of the central bank intervention in the market. The central bank has been defending the 88.80 levels for quite some weeks now.
Traders said the RBI intervention was not only in the spot market but also in the non-deliverable forward (NDF) market, which has huge volumes every day and thus plays the biggest role in the rupee levels. An analysis of the successive data from the monthly RBI bulletins, shows that the RBI sold a record $37.99 billion in January-September—the highest for any nine months since 2022.
The RBI sold $58.255 billion between January and September 2022. The dollar sale during the first half of the current fiscal was $23.5 billion in the spot market to support the rupee. Usually, when the central bank intervenes in the spot market, it spends from its foreign exchange reserves.
According to market analysts, the rupee has depreciated 4.10 percent so far in the calendar year and 4.26 percent in the fiscal. The rupee is the worst-performing currency this year followed by the Indonesian rupiah, which has lost 3.36 percent and the Philippine peso, which has fallen 1.73 percent. However, including Japan, the rupee is the second-worst performing Asian currency this fiscal after the Japanese Yen, which has lost down 4.36 percent year to date.