Reserve Bank of India net sold $31.98 billion to defend rupee in Jan-Oct 2025

Aimed at stabilising the rupee amid persistent global and domestic pressures, the Reserve Bank of India sold dollars worth $31.98 billion on a net basis during the first ten months of 2025, marking a sharp turnaround from a net purchase of $23.03 billion in the January–October period of 2024. The intervention underscores the central bank’s efforts to curb excessive volatility in the foreign exchange market at a time of a strong US dollar, shifting global capital flows and uncertainty over interest rate trajectories.

Despite these interventions, the rupee depreciated by 3.3 per cent between January and October 2025, compared with a 2.2 per cent decline in the corresponding period of 2024, reflecting the continued impact of external headwinds even as the RBI sought to smooth movements in the currency rather than defend any specific level.

According to latest RBI data, during the first 10 months of 2025, the central bank sold $207.96 billion worth of dollars on a gross basis, signaling higher spot forex interventions to manage rupee volatility. This marks a sharp 35 per cent jump from $154.5 billion sold in January-October 2024.

The average monthly dollar sales by the RBI was close to $21 billion in the first 10 months of 2025, compared to $15.45 billion in 2024. “It (higher gross dollar sales number) was expected as there has been higher interventions by the RBI this year (2025) because the rupee has been extremely volatile,” said Madan Sabnavis, chief economist, Bank of Baroda.

On the other hand, during January-October 2025, the RBI purchased $175.97 billion worth of the US currency, as against $177.53 billion bought over the same period in 2024, RBI data shows.

“2025 marks a clear evolution in RBI’s FX playbook. More selling, more forwards, less optics, more finesse. RBI is no longer just managing the currency — it is managing expectations, liquidity, and macro trade-offs simultaneously,” said Anindya Banerjee, head currency and commodity research, Kotak Securities.

India’s forex reserves were $ 693.3 billion as on December 19, 2025. “In 2024, RBI’s net purchase position reflected a bias towards reserve accumulation and curbing excessive rupee appreciation. In contrast, 2025 intervention has been far more two-way and tactical, indicating RBI’s intent to smooth volatility rather than defend any specific level of the rupee. This is consistent with RBI’s repeated communication that it does not target a particular exchange rate level, but intervenes to manage disorderly movements,” said Dipti Chitale, CEO, Mecklai Financial Services.

The January-March 2025 period witnessed the highest amount of activity with gross dollar purchases exceeding sales. The RBI purchased $135.69 billion of dollars from the spot market and offloaded $134.1 billion. It sold $60.28 billion in January, the highest monthly sale in the first 10 months of this year.

In 2025, the RBI’s forward interventions surged, with outstanding net forward sales at the end of October 2025 reaching $63.6 billion, compared to $49.18 billion in October 2024.

“The sharp increase in RBI’s net forward dollar sales, up nearly 30 per cent year-on-year, marks a significant shift in the intervention mix. This highlights RBI’s greater reliance on the forward and swap markets rather than outright spot intervention,” Chitale said.

This approach allows the RBI to manage rupee liquidity more efficiently, smoothes the impact on foreign exchange reserves by avoiding abrupt drawdowns in the spot market and reduces market disruption by spreading dollar supply over time, she said.

However, a rising forward book also implies future dollar delivery obligations, which increases the importance of careful liquidity planning, she noted.