RBI Net Sells $11.88 Billion in October Amid Elevated INR Volatility

The Reserve Bank of India (RBI) sharply increased its intervention in the foreign exchange market in October, net selling $11.8 billion, the highest monthly dollar sale since December 2024. 

This followed net dollar sales of $7.9 billion in September, reflecting rising pressure on the Indian rupee amid global and domestic uncertainties, according to the central bank’s monthly bulletin.

Managing Rupee Weakness in October

During October, the RBI supplied dollars consistently to prevent the rupee from weakening beyond the 88.80 level against the US dollar. 

The Indian currency largely traded in the 87–88 range during the month before depreciation pressures intensified later due to foreign portfolio investor outflows from domestic equities. The RBI’s actions aimed to smooth volatility rather than defend any specific exchange rate.

Spot and Forward Market Intervention

Data from the bulletin showed that the RBI gross purchased $17.685 billion and sold $29.562 billion in October, resulting in net dollar sales of $11.88 billion. At the same time, the outstanding net short dollar position in the rupee forward market rose to $63.6 billion at the end of October, up from $59.4 billion a month earlier.

Exchange Rate Metrics and REER Trends

As of November 2025, the real effective exchange rate of the rupee stood at 97.51, unchanged from October. The REER adjusts the nominal effective exchange rate for inflation differentials with major trading partners. A REER reading below 100 suggests that the rupee has depreciated compared to the base year, potentially improving export competitiveness but also raising concerns about imported inflation if weakness persists.

Rupee Under Sustained Pressure

The rupee has faced sustained pressure in recent months due to delayed trade negotiations, foreign capital outflows, and global risk aversion. 

The currency touched fresh record lows and briefly crossed the 91-mark, prompting the RBI to step up intervention using its foreign exchange reserves. Over the last three months, the rupee has traded in a wide range of 88.20 to 91.03 per dollar, highlighting elevated volatility.

Read More: RBI Imposes ₹61.95 Lakh Penalty on Kotak Mahindra! 

Conclusion

The RBI’s heightened dollar sales in October underline its commitment to containing excessive rupee volatility amid challenging market conditions. While the central bank continues to allow market-driven movements, persistent intervention reflects concerns around imported inflation, capital flows, and financial stability as the rupee navigates a volatile global environment.

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