RBI steps up dollar sales to $53 billion to defend rupee in FY26

MUMBAI: RBI stepped up dollar sales in FY26 to manage exchange rate volatility. The central bank recorded a total net sale of $53.1 billion over the course of the fiscal year an increase of $12 billion compared to net sales of $41.1 billion in FY25. Despite temporary periods of dollar accumulation, the central bank maintained a decisive stance as a net seller of foreign currency across both fiscal years.

Given that the dollars were purchased when the rupee was stronger, bankers estimate RBI to have made at least 10% profit on its sales. In other words, nearly Rs 50,000 crore of its income could have come from forex intervention in FY26. The impact of dollar sales on RBI's reserves has been partly cushioned by the increase in the value of gold.

The closing months of FY26 highlighted this aggressive tactical maneuvering. In March 2026, the RBI heavily liquidated greenbacks, executing a net sale of $9.8 billion. This marked a swift, complete reversal from Feb 2026, when the central bank had actively absorbed dollars with a net purchase of $7.4 billion.

An analysis of monthly peaks over the two-year horizon shows that the absolute highest volume of net dollar sales occurred in Nov 2024 (FY25), when the central bank flooded the market with a massive net sale of $20.2 billion. In comparison, the peak selling month for FY26 was Oct 2025, which saw a net liquidation of $11.9 billion.

Conversely, RBI demonstrated its strongest appetite for dollar accumulation in March 2025 (FY25), wrapping up that fiscal year with an impressive net purchase of $14.7 billion. This remains the highest volume of net purchases across the entire two-year duration, comfortably eclipsing FY26's peak accumulation month of Feb 2026, where net purchases stood at $7.4 billion.

Re rises on RBI intervention

The rupee rose for the second straight session on Friday, gaining 51 paise to close at 95.69, and with Thursday's 62 paise appreciation has erased most of its losses from earlier this week. The currency strengthened despite firming global oil prices, with crude swinging higher as stop-start US-Iran peace talks continued to seesaw and dragged market sentiment with each shift. Support came from RBI intervention and announcement of a $5 billion swap, which is expected to add to the central bank's forex reserves in the medium term.

Forex reserves fall $8.1bn

Meanwhile, forex reserves fell $8.1 billion to $688.9 billion in the week ended May 15 driven mainly by a $6.5 billion drop in foreign currency assets (FCAs) and a $1.5 billion decline in gold reserves due to valuation effects.

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