The rupee has depreciated more than 2% so far this year, making it among Asia’s worst-performing currencies
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DHIRAJ SINGH
RBI sold US dollars across both onshore and offshore currency markets this month to prop up the rupee as it weakened toward a record low, according to people familiar with the transactions.
The Reserve Bank of India sold at least $5 billion worth of the US currency, one of the people said, asking not to be identified as the information is private. The RBI didn’t immediately respond to an email requesting comment on the matter. If the trend persists, it could become RBI’s largest month of net dollar sales since January.
The rupee fell to 87.89 per dollar last week, just shy of its all-time low as US President Donald Trump doubled tariffs on Indian goods on Aug. 6 to 50% as a penalty for its purchases of Russian oil. A weaker rupee could fuel imported inflation and strain an already fragile economic recovery.
The intervention suggests a potential shift away from the RBI’s previously restrained approach under Governor Sanjay Malhotra, who took office in December.
The rupee has depreciated more than 2% so far this year, making it among Asia’s worst-performing currencies. Roughly half of that drop came in the past two weeks after it became evident Trump was planning to increase the tariffs.
On multiple occasions last week, the central bank was seen stepping into the offshore market just before domestic currency trading began at 9 a.m. Mumbai time, according to two of the people familiar with the matter, who declined to be identified as they aren’t authorized to speak on it.
Relying on so-called non-deliverable forwards allows the central bank to guide the rupee’s trajectory without having to sell large volumes of dollars outright. The central bank heavily relied on this strategy last year.
The RBI’s latest foreign-exchange reserves data also point to increased intervention, with the stockpile falling by $9.3 billion, the steepest drop since November, to $689 billion in the week through Aug. 1. Part of the decline may reflect valuation changes in global currencies, not solely the central bank’s dollar sales or purchases.
–With assistance from Anup Roy.
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Published on August 11, 2025
