The Reserve Bank of India (RBI) sold a net $53.13 billion in the spot foreign exchange market in 2025-26 (FY26), the highest net dollar sale by the central bank in a financial year, its latest data showed.
During 2024-25, the central bank sold a net $34.51 billion.
According to the RBI’s monthly bulletin, it sold $9.76 billion (net) in March, the third-highest net monthly dollar sale in FY26, against a net buy of $7.41 billion in February.
The central bank bought $19.89 billion while it sold $29.64 billion during the month.
Data showed the RBI remained a net seller of dollars for most of FY26, with the largest monthly net sale recorded in October at $11.88 billion, followed by December at $10.02 billion.
The central bank turned a net buyer in January and February before returning to net sales in March.
The rupee depreciated by 9.9 per cent during the financial year.
Market participants said the RBI supplied dollars through much of the year amid sustained pressure on the rupee driven by global uncertainty, persistent foreign outflows from domestic equity and debt markets, and a rise in crude oil prices.
“For the past year, there has been massive foreign portfolio investor (FPI) outflow, keeping the rupee under pressure, and the RBI was there to contain volatility,” said the treasury head at a private bank.
Meanwhile, the Real Effective Exchange Rate (REER) of the rupee fell to 88.06 by April end, against 89.23 by March end.
The REER adjusts the Nominal Effective Exchange Rate (NEER) to account for inflation differentials between India and its major trading partners.
A REER value above 100 indicates an appreciation of the rupee relative to the base year, potentially making Indian exports less competitive in global markets.
Separately, the RBI’s outstanding net short dollar position in the forward market rose sharply to $103.06 billion at the end of March 2026, compared with $77.67 billion at the end of February.
Market participants said the RBI increasingly relied on buy-sell swaps and forward market operations during the year to balance foreign exchange intervention with domestic liquidity management.
Such operations help the central bank smoothen volatility in the currency market without significantly tightening banking system liquidity.
“The RBI’s elevated forward dollar sales indicate that the central bank preferred to manage rupee volatility through the non-deliverable forward (NDF) market along with spot intervention. This is because outright dollar sales in the spot market would have drained rupee liquidity from the banking system. The rise in forward positions was also aimed at containing liquidity tightness and moderating forward premiums amid global volatility and pressure on the rupee,” said a treasury executive at another private bank.
During 2025-26, the central bank’s net short dollar position increased by $18.72 billion.
The RBI bought $142 billion, while it sold $195 billion during the financial year 2025-26.
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