The Reserve Bank of India has intensified dollar sales to stabilise the rupee, facing challenges from high oil prices, weak capital flows, and tariffs on exports, with reserves at nearly $700 billion providing room for continued intervention.
The Reserve Bank of India is again using dollar sales to steady the rupee, traders told Reuters, as the currency remains under pressure from higher oil prices, weak capital flows and heavy tariffs on Indian exports. The intervention suggests the central bank is still drawing a clear line around current levels and remains willing to use its sizeable reserves to slow any further fall.
According to traders, the rupee had weakened from around 90 to near 97 per dollar earlier in 2026 before recovering somewhat as the RBI stepped up intervention, with the currency rising about 1% last week alone. Business Standard reported in March that the central bank’s dollar selling was then relatively measured, aimed more at limiting volatility than defending a fixed exchange rate.
The latest support comes against a difficult external backdrop. Steep US tariffs, reported at as much as 50% on some Indian goods, have hurt export competitiveness and reduced dollar inflows. Foreign portfolio investors have also continued to pull money from Indian stocks and bonds, adding to demand for dollars. At the same time, oil prices have risen on Middle East tensions, worsening India’s import bill because the country buys roughly 70% of its crude in dollars.
India’s foreign exchange reserves give policymakers room to keep intervening if needed. The Reserve Bank’s annual report showed reserves at $691.1 billion at the end of March, while other estimates in April placed them close to $697 billion. The RBI also stepped up dollar sales to $53.1 billion in fiscal 2026, according to The Times of India, and has kept its repo rate unchanged at 5.25% for a fourth straight meeting while maintaining a neutral stance. It also introduced a dollar-rupee swap facility in June to support overseas borrowings by public sector undertakings and banks.
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