The Reserve Bank of India (RBI) has reported its largest net sale of foreign currency in the past 15 years, with outstanding positions in the forward market reaching a decadal high in fiscal year 2026 (FY26). These actions were prompted by the rupee’s depreciation of approximately 9.5% against the dollar, influenced by uncertainties related to U.S. tariffs and capital outflows.
Historically, RBI’s interventions in the spot market have varied with global financial conditions and domestic capital flows. During the fiscal year 2011-12, for example, the central bank sold $20.14 billion amidst the ‘taper tantrum’ when India was classified as one of the ‘fragile five.’ In FY19, net sales amounted to $15.38 billion due to stress in emerging markets and rising U.S. interest rates. In FY23, RBI sold a total of $25.52 billion in response to the Russia-Ukraine conflict, elevated crude oil prices, and a strengthening U.S. dollar—factors that adversely impacted emerging market currencies, including the rupee. However, FY26 surpassed previous years, reaching cumulative net dollar sales of $53.13 billion, significantly higher than the $34.51 billion net sales recorded in FY2024-25.
Madan Sabnavis, chief economist at Bank of Baroda, stated, “The record sale of dollars in the spot market by the RBI was to stabilize the rupee, which had depreciated almost 10% against the dollar in FY26, following the tariffs imposed on India by the Trump administration.”
Data indicate that RBI’s dollar-selling interventions intensified in the latter part of FY 2025-26. After modest sales in the earlier months, the central bank sold $7.70 billion in August, $7.91 billion in September, and reached a peak with $11.88 billion in October 2025, marking the highest monthly sale in the fiscal year. The spike in October aligned with concerns over U.S. tariff measures affecting global trade and emerging-market currencies. Temporary relief was noted in January and February 2026, when the RBI shifted to net purchases of $2.53 billion and $7.41 billion, respectively, before resuming sales of $9.76 billion in March amidst tensions in West Asia and related oil shocks.
Additionally, RBI’s net forward position entered a record negative territory, amounting to $103.06 billion in March 2026, exceeding the previous record negative of $84.35 billion from March 2025.
Anindya Banerjee, head of research-FICC at Kotak Securities, commented on the forward market: “Selling of dollars in the forward market by the RBI does not impact the liquidity of the rupee or other assets as long as it is not delivered. The choice between spot and forward market sales is influenced by RBI’s objectives at the time.” He added that if rupee liquidity is ample and Foreign Portfolio Investments (FPIs) are under pressure, intervening in the spot market can address both issues simultaneously, similar to the strategy employed in FY 2022-23.
Sabnavis also emphasized that “there is a signaling component to selling in the forward market as well. It signals to foreign investors that the RBI is not ready to give up on the rupee, which can help to mitigate speculative pressures on the currency.”
This article was published on May 27, 2026.
