The Reserve Bank of India (RBI) sold an estimated $2 billion to $3 billion on Thursday to defend the rupee against sustained pressure, and stepped in again on Friday, helping the currency strengthen past the 96-per-dollar mark, according to bankers cited by Reuters.
The rupee rose 0.64 per cent to close at 96.20 against the US dollar on Thursday after the intervention and extended gains on Friday as the central bank resumed dollar sales.
Bankers said the RBI intervened through large state-run banks even before markets opened on Thursday, with around $500 million reportedly sold in pre-market trading. Limited liquidity during that period amplified the impact of the intervention, they added.
RBI intervention intensifies
According to Reuters, the latest intervention marked a significant increase from recent days, when average dollar sales were around $1 billion.
A trader at a Mumbai-based bank said that the RBI’s dollar sales on Thursday appeared “level-agnostic” and aimed at triggering a rally in the rupee while discouraging speculative bets against the currency.
“The RBI is currently the sole major dollar seller,” a treasury official at a private-sector bank told Reuters, adding that the trend may continue unless oil prices moderate.
Some traders estimated the RBI may have sold as much as $4-5 billion on Thursday. Heavy intervention reportedly continued throughout the trading session, with the rupee moving in a 95.99-96.50 range.
“The RBI must have sold $4-5 billion today, so there was heavy dollar selling after a long time,” Anil Bhansali, head of treasury at Finrex Treasury Advisors, said, as quoted by ET.
Oil prices remain key pressure point
Elevated crude oil prices driven by the ongoing Middle East conflict continue to weigh heavily on the rupee. India, the world’s third-largest oil importer, relies significantly on imported crude, leading to higher dollar demand from refiners when oil prices rise.
The rupee had weakened nearly 2.5 per cent in the two weeks before Thursday’s intervention, while the currency has depreciated over 3 per cent in FY27 so far and nearly 11 per cent in FY26 against the dollar.
“Underlying sentiments like higher oil prices and FPI outflows continue, and until those persist, there will be weakness,” VRC Reddy, head of treasury at Karur Vysya Bank, told ET.
Government weighing further measures
India is also considering additional measures to stabilise the rupee, commerce minister Piyush Goyal said on Thursday.
Policymakers are even considering a possible interest rate hike to support the currency.
“There is a possibility of rate action, which aided the rupee,” Reddy said.
DBS Bank expects the rupee to trade in the 95-100 range for the rest of 2026.
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