The Reserve Bank of India sold $9.8 billion in foreign exchange reserves during March to support the rupee, which posted its steepest monthly decline since 2019. The intervention underscores the central bank’s determination to prevent a free fall in the currency amid global headwinds.
Why the RBI intervened
The rupee came under heavy pressure last month as investors shifted toward the dollar on expectations of higher U.S. interest rates. India’s trade deficit widened, and capital outflows accelerated. To slow the rupee’s slide, the RBI stepped into the market, selling dollars from its reserves. That $9.8 billion figure is large even by the RBI’s standards — the central bank rarely discloses monthly intervention totals with such precision.
The rupee’s toll
Despite the RBI’s efforts, the rupee still ended March with its biggest monthly loss in six years. The currency weakened roughly 3% against the dollar over the month, a sharp move for a normally managed exchange rate. Importers — especially those buying oil or machinery — felt the pain immediately. Exporters got a temporary boost, but the drop also raises the cost of servicing foreign debt.
What comes next
Traders are watching the RBI’s April intervention data closely. If the central bank continues selling at the same pace, reserves — which stood at roughly $640 billion in February — could shrink further. The next move may depend on the April U.S. jobs report and Federal Reserve meeting. The RBI hasn’t signaled any change in its approach, but the scale of March sales suggests it’s willing to spend heavily to defend the rupee.
