Economists said the interventions were aimed at stabilising the rupee, which depreciated about 9.5 per cent against the dollar during the fiscal year. | Photo Credit: iStockphoto

The Reserve Bank of India recorded its largest net sale of foreign currency in at least 15 years, and its outstanding position in the forward market hit a decadal high in FY26. These measures were a response to the rupee’s weakness, driven by US tariff-related uncertainty and capital outflows. The rupee lost approximately 9.5 per cent against the dollar in FY26.

Spot market intervention swells to historic highs

RBI’s net purchase or sale of dollars in the spot market has historically fluctuated with global financial conditions and domestic capital flows. The central bank sold $20.14 billion in FY2011-12, during the taper tantrum when the Indian economy was considered one of the ‘fragile five’. FY19 saw net sales of $15.38 billion amid emerging market stress and rising US interest rates. In FY23, RBI sold $25.52 billion amid the Russia-Ukraine conflict, elevated crude oil prices, and a strengthening US dollar, which weakened emerging market currencies, including the rupee. FY26, however, eclipsed all previous years, with cumulative net dollar sales reaching $53.13 billion. The figure was substantially higher than the $34.51 billion net sale recorded in FY2024-25.

According to Madan Sabnavis, chief economist at Bank of Baroda, “the record sale of $ in the spot market by the RBI, was to stabilise the ₹ which had depreciated almost 10 per cent against the $ in FY26, following the tariffs imposed on India by the Trump administration.”

Heavy dollar selling concentrated in later part of FY 2025-26

Monthly data reveal RBI’s interventions intensified from August onward. After modest sales in April and June, the central bank sold $7.70 billion in August, $7.91 billion in September and a massive $11.88 billion in October 2025, the highest monthly sale of the fiscal year.

The October spike coincided with heightened concerns about the impact of US tariff measures on global trade and emerging-market currencies. Temporary relief emerged in January and February 2026, when RBI turned a net buyer of $2.53 billion and $7.41 billion, respectively, before resuming sales of $9.76 billion in March, following the conflict in West Asia and the subsequent oil shock.

Forward $ position hits record net sales

RBI’s outstanding net forward position also moved deep into negative territory. Outstanding net forward sales stood at a record negative $103.06 billion in March 2026, surpassing the previous record negative $84.35 billion in March 2025.

Anindya Banerjee, head of research- FICC of Kotak Securities, explains, “the selling of $ in the forward market by the RBI, does not impact the liquidity of the ₹ or the assets as long as it’s not delivered. Therefore, whether the RBI sells $ in the spot or forward markets depends on their objectives at that moment. If ₹ liquidity is high, along-with FPI selling, then selling $ in the spot market can take care of both issues at once, much like what was done in FY 2022-23.”

Madan Sabnavis, meanwhile, stresses that “there is a signalling component to selling in the forward market as well. It signals to the foreign investors that RBI is not ready to give up on the ₹. This can arrest some speculative pressures on the ₹.”

Published on May 27, 2026