Abstract：The Reserve Bank of India has spent roughly half of the $140 billion it raised through special foreign-currency measures this year defending the rupee, according to estimates from economists and FX traders across six banks.
The central bank has deployed around $75 billion to $80 billion through spot dollar sales and dollar-rupee swaps since the special measures took effect on June 8, three economists estimate.
India's forex reserves fell to $734.6 billion through October 2, down about $51 billion from their peak in the first week of September. The drawdown reflects the RBI's determination to check rupee weakness, even as high oil prices, a surge in US Treasury yields and ongoing foreign equity outflows keep the pressure on.
ContentsThe economists arrived at their estimates by adjusting weekly changes in India's foreign-exchange reserves — published by the RBI every Friday — to strip out revaluation effects.
Their figures line up with the calculations of traders at banks that handle spot and swap transactions, who drew on discussions with other bankers and FX brokers plus proprietary models built on market parameters.
At the end of September, the RBI's net forward dollar liabilities stood at about $200 billion. The value of its gold holdings was $106.4 billion through October 2.
“The sharp fall in usable reserves, after adjusting for forward shorts and gold, has reached noticeable levels,” analysts at brokerage Ambit said in a note. “A continued fall could raise doubts about the RBI's ability to defend the rupee and fuel more speculation.”
The June special measures were designed to pull dollars in. The FCNR (B) deposit window for non-resident Indians drew a much larger-than-expected response, with inflows estimated at between $127 billion and $133 billion.
Along with other measures, total foreign-currency mobilisation came to around $140 billion. Reserves peaked at roughly $785 billion in the week to September 4.
Then the tide turned. In the four weeks to October 2, reserves fell by about $51 billion. The RBI's spot dollar sales supported the local currency, while dollar-rupee sell/buy swaps absorbed surplus rupee liquidity in the banking system — both behind the drawdown, per the six banks' economists and traders.
The pressure has come from multiple directions. Middle East conflict has kept crude elevated, widening India's import bill. Foreign investors have pulled more than $30 billion from Indian equities this year.
A strong dollar and rising US Treasury yields have drawn capital away from emerging markets. The rupee came close to its record low near 97 per dollar in early October before recovering.
Last weekend, the RBI introduced measures aimed at directly curbing dollar demand. It opened a special window for oil companies to buy dollars straight from the central bank, pulling their demand out of the open market.
It also imposed cash margin requirements on certain forward dollar purchases, making it more expensive for importers to hedge currency exposure.
Brokerage Nomura called this the “second line of currency defence.” In an October 10 note, it flagged the restrictions on FX derivative transactions, a 20% foreign exchange risk reserve, and the special dollar window for three public oil marketing companies.
The RBI has barred market participants from rebooking cancelled rupee derivative contracts and cut the threshold for transactions without established underlying exposure to $5 million from $100 million. For contracts above $2 million, authorised dealers must maintain a foreign exchange risk reserve equal to 20% of the notional amount in rupees.
“These measures are a clear signal of policymakers' discomfort over any further rupee depreciation,” Nomura said.
The RBI also raised the daily minimum cash reserve ratio maintenance requirement to 99% from 90%, effective October 16, while keeping the CRR itself unchanged. It conducted an additional open market operation sale of Rs 250 billion on October 13 to drain liquidity.
“Over the last six months, the RBI has repeatedly stepped in with major measures whenever the exchange rate approached the 97/USD mark, signalling this level as the RBI's implicit tolerance threshold,” Ambit said.
The rupee has since recovered, rising for four consecutive sessions to close at 95.15 per dollar on October 14, helped by easing crude prices and periodic dollar softness. On October 12, the currency strengthened about 1% to 95.77 per dollar — its strongest single-day rally in six months.
The recovery may reduce the immediate need for intervention. The outlook, though, remains tied to oil prices and global interest rates.
Selling dollars drains rupee liquidity from the banking system. The FCNR (B) inflows had created surplus liquidity that offset part of that effect, but the special deposit window created two challenges of its own: excess liquidity in the short term, and redemption pressure when the deposits mature in three to five years. Some economists argue the RBI can deploy the funds profitably in global assets, offsetting part of the cost.
Forex reserves have fallen by approximately $43 billion since the FCNR (B) window closed in early September, despite the scheme having boosted reserves by around $105 billion.
Nomura said policymakers face the “impossible trinity” of managing the exchange rate, maintaining monetary policy independence and allowing free capital flows. “If the global backdrop does not improve, then more difficult policy choices will need to be made,” the brokerage said.
The RBI did not immediately respond to a request for comment.
On X, @HeySanjaySingh amplified the headline figure — “RBI HAS SPENT UP TO $80 BILLION DEFENDING THE RUPEE” — and noted the $140 billion raised through special forex measures. The post carries no additional detail beyond the main claim.
A separate post from @BigBreakingWire focused on a different development: the RBI clarifying its FX derivatives rules, with market-making exempt. That post does not directly address the scale of intervention, but it touches on the same regulatory tightening that Nomura flagged in its note.
Neither social post provides independent verification of the $75-80 billion deployment figure. The estimates rest on the six banks' economists and traders, as reported by Reuters and carried by Business Standard, CNBC-TV18, and other outlets. The RBI has not confirmed the numbers.
One point of divergence between the social posts and the news reports: the social posts frame the $80 billion figure as fact, while the underlying reports attribute it to banker estimates. The distinction matters — the RBI has not officially disclosed its intervention size.
For traders holding USD/INR positions, the key question is how long the RBI can sustain this pace of dollar sales. The central bank's weekly reserve data, published every Friday, is the clearest window into the drawdown. The next release will show whether the pace of depletion has slowed since the October 12 measures.
If reserves keep falling at the recent clip, the buffer available for future shocks shrinks. The RBI has said its intervention aims to curb excessive volatility rather than target a specific exchange rate — but Ambit's reading of the 97/USD threshold suggests the market has its own view of where the line is drawn.
For importers, the cash margin requirements on forward dollar purchases have made hedging more expensive. For those with open positions, the cost of rolling hedges has gone up. The special oil dollar window removes some demand from the open market, which could reduce sharp moves around crude price spikes.
The rupee's recent recovery to 95.15 may ease the immediate pressure. Whether that holds depends on oil and US yields — both outside the RBI's control.
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