The Reserve Bank of India (RBI) intervened in the foreign exchange market by selling between $2 billion and $3 billion on Thursday to support the rupee amidst ongoing pressure. According to bankers, this intervention contributed to a strengthening of the rupee, helping it move past the 96-per-dollar threshold on Friday.
Prior to market opening on Thursday, the RBI’s actions through major state-run banks spurred a rise in the rupee, with dollar sales continuing throughout much of the day. As a result of this intervention, the rupee gained 0.64% and closed at 96.20. On Friday, sales resumed, and the rupee extended its gains, as reported by bankers.
Bankers indicated that around $500 million was sold pre-market on Thursday, noting that limited market liquidity at that time enhanced the intervention’s impact. They requested anonymity as they are not authorized to speak publicly.
This latest intervention marks a noticeable increase from previous days, where dollar sales averaged around $1 billion. In the wake of recent record lows, India is exploring several strategies to mitigate the rupee’s depreciation, Trade Minister Piyush Goyal stated on Thursday.
Intervention estimates generally derive from market intelligence, with bankers closely monitoring state-run banks’ activities, insights from foreign exchange brokers, and volumes on order-matching platforms. Historically, such pre-market interventions by the RBI aim to deter speculative positioning and manage expectations of ongoing depreciation. The rupee had fallen roughly 2.5% in the two weeks leading up to Thursday’s actions.
The central bank has not yet responded to requests for comment via email. Reports from traders suggest a shift in the RBI’s intervention strategy has also benefitted the currency. Before Thursday, the RBI had been supplying dollars at market levels without significantly lifting the rupee’s value. However, the recent dollar sales were not tied to specific levels and seemed designed to instigate a rally in the rupee while potentially discouraging speculative activities, according to a trader at a Mumbai bank.
A treasury official at a private-sector bank indicated that the RBI is currently the primary seller of dollars in the market, a situation that could persist without a decrease in oil prices. Elevated crude oil prices, exacerbated by conflicts in the Middle East, represent a key challenge for the rupee. As the world’s third-largest oil importer, India’s heavy reliance on imported crude means that rising energy prices result in increased daily dollar demand from refiners.
This depreciation trend is further influencing importers’ hedging strategies for forward dollar payments, with expectations of continued rupee weakness contributing to increased structural demand for dollars.
Published on May 22, 2026.
