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RBI Sells $7.7 Billion in Spot Forex Market to Support Rupee in August

Written by: Akshay ShivalkarUpdated on: 21 Oct 2025, 3:17 am IST
RBI sold $7.7 billion in spot forex in August to stabilise the rupee after it breached 88 per dollar, its sharpest monthly fall in recent times.
RBI Sells $7.7 Billion in Spot Forex Market to Support Rupee in August
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The Reserve Bank of India (RBI) sold a net of $7.7 billion in the spot foreign exchange market in August to curb volatility and support the Indian rupee. The currency slipped 0.68% during the month, breaching the 88-per-dollar mark for the first time. This reflected pressure from global factors, including a strong US dollar, and rising import costs in India.

Details of RBI Intervention

According to RBI’s monthly bulletin, the central bank made no dollar purchases in August and sold $7.7 billion in the spot market. This represented a significant escalation from the net sale of $2.54 billion in July.

The intervention sought to address heightened volatility triggered by external economic signals. RBI's actions focused on smoothing out abrupt currency swings to foster orderly market conditions.

Rupee Movement and Market Impact

The Indian rupee depreciated 0.68% in August, closing at 88.1950 against the US dollar. It crossed the 88 level for the first time, underscoring the intensity of monthly pressures.

As of October 21, the rupee traded at 87.9275, showing a modest recovery. Market participants noted RBI's indirect support through state-run banks around the 88 threshold.

RBI's Forward Market Position

RBI’s net outstanding forward sales reached $53.36 billion by the end of August, a decline from $57.85 billion at July's close. This shift indicates proactive adjustments to forward commitments.

Forward operations enable RBI to address anticipated rupee pressures over future periods. They work alongside spot interventions to create a comprehensive defence mechanism.

Broader Economic Context

RBI's moves unfolded amid global currency turbulence, soaring commodity prices, and expanding trade imbalances. India faced elevated costs for energy and metals imports during the period.

In September, imports surged, particularly in gold and silver, widening the trade deficit to $32.15 billion, a 13-month peak. These dynamics amplified downward forces on the rupee.

Conclusion

RBI’s $7.7 billion spot sales in August demonstrate its dedication to stabilising the rupee against formidable external headwinds. The breach of 88 per dollar necessitated robust action to mitigate risks of further erosion. Adjustments in forward positions and attention to trade deficits reinforce this proactive stance.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Published on: Oct 20, 2025, 9:43 PM IST

Akshay Shivalkar

Akshay Shivalkar is a financial content specialist who strategises and creates SEO-optimised content on the stock market, mutual funds, and other investment products. With experience in fintech and mutual funds, he simplifies complex financial concepts to help investors make informed decisions through his writing.

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