The Reserve Bank of India is subtly intervening in the currency market by selling dollars to stabilise the rupee as it approaches historical highs, amid persistent demand and geopolitical uncertainties, signalling a nuanced approach to currency management in 2026.
The Reserve Bank of India is once again believed to be selling dollars to steady the rupee as USD/INR trades close to the upper end of its recent range, around 95.4 to 95.6. That would fit a familiar pattern this year: the central bank has repeatedly leaned against sharp moves higher in the dollar pair when it has come near record levels, rather than trying to force a lasting reversal. According to market participants, that approach suggests the RBI is still willing to smooth volatility even if it is not aiming to break the broader trend.
The rupee has already been through several bouts of pressure in 2026. USD/INR reached an all-time high of 96.844 on 20 May, and reports from Indian media said the RBI responded then with heavy dollar sales and a $5 billion swap auction to cool the move. Moneycontrol also reported that the bank intervened again in July when the rupee weakened towards fresh lows, while Business Standard said the central bank’s net dollar sales in the spot market in fiscal 2025-26 reached a record $53.13 billion.
Underlying demand for dollars has remained strong. Persistent foreign investor selling of Indian equities has weighed on the currency for much of the year, while higher oil prices have added to import costs. Tensions linked to the conflict involving Iran have kept energy markets uneasy, and US President Donald Trump has also warned that tariffs on Indian goods could rise if New Delhi does not curb purchases of Russian oil, adding another layer of uncertainty for traders.
At the same time, the RBI has not relied on intervention alone. According to reports cited by market watchers, it recently ended its FCNR deposit foreign-exchange swap window early after attracting nearly $57 billion in inflows, a move that also helped the rupee. That backdrop, combined with softer broad US dollar demand and reduced expectations for further Federal Reserve tightening, means traders see the RBI’s latest action as an attempt to slow depreciation, not to fight the wider direction of the currency outright.
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