The Reserve Bank of India has reinforced its commitment to stabilising the rupee through strategic interventions, including dollar-rupee swaps, amid volatile global conditions and record surplus liquidity, signalling a sustained effort to prevent sharp declines in the currency.
The Reserve Bank of India appeared to step into the foreign exchange market on Wednesday to steady the rupee, traders told Reuters, reinforcing expectations that the central bank is still prepared to lean against sharp moves in the currency. The rupee was last seen at 95.97 to the dollar, with state-run banks offering dollars in a pattern traders said was consistent with RBI action. Several traders said the offers clustered close to the 96 level, suggesting the central bank was trying to prevent a slide through a key psychological threshold.
That reading fits with a broader pattern of intervention seen in recent weeks. According to reports from Moneycontrol, the RBI has also been using dollar-rupee sell-buy swaps to drain surplus rupee liquidity from the banking system, rather than relying solely on direct spot-market sales. Traders said that approach helps the central bank support the currency while also keeping excess cash from feeding further pressure on financial markets.
The RBI’s willingness to intervene has been backed by a stronger reserve position. Business Standard reported in August that the central bank had stepped up support for the rupee as oil prices rose, helped by a larger war chest after fresh dollar inflows since June. The Indian Express later reported that a special dollar-rupee swap facility had attracted provisional inflows of $136.377 billion by September 2, including $127.226 billion through foreign currency non-resident bank deposits. Those inflows have given policymakers more room to manage volatility without relying on more disruptive measures.
At the same time, the RBI has been operating in a market under strain from external pressures. Traders cited volatile global conditions, weak portfolio flows and a heavy rupee liquidity overhang as reasons the central bank has kept a close hand on the currency. A September report from TechTimes said India’s banking system was carrying a record ₹11 trillion in surplus rupee liquidity, making swap operations an attractive tool for draining cash while avoiding direct bond sales. In that context, Wednesday’s reported intervention looks less like an isolated move than part of a sustained effort to keep the rupee’s decline orderly.
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