RBI Uses About Half of $140 Billion FX Inflows to Defend Rupee
The Reserve Bank of India (RBI) has used an estimated $75–80 billion, roughly half of the more than $140 billion mobilised through special measures earlier this year, to support the rupee, according to economists and foreign-exchange traders cited by Reuters. The intervention has involved spot dollar sales and dollar-rupee sell/buy swaps since June 8.
India’s foreign-exchange reserves fell to $734.6 billion as of October 2, around $51 billion below their peak in the first week of September. The decline reflects sustained intervention as the rupee faces pressure from elevated oil prices, higher US Treasury yields and continued foreign equity outflows.
The RBI’s net forward dollar liabilities stood at approximately $200 billion at the end of September, while its gold holdings were valued at $106.4 billion as of October 2. Analysts have warned that a continued reduction in usable reserves could raise concerns about the central bank’s capacity to defend the currency and potentially encourage speculative activity.
The RBI has also introduced measures to reduce dollar demand, including a special window allowing major state-owned oil companies to purchase dollars directly from the central bank and new cash-margin requirements for certain forward dollar purchases. These steps aim to reduce pressure on the spot market, although they could further draw down reserves.
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