India's foreign exchange reserves fell by $51.11 billion from a record $785.71 billion on September 4 to $734.60 billion by October 2, reflecting intensified pressure on the rupee, according to bfsi.economictimes.indiatimes.com. The Reserve Bank of India (RBI) has responded by supplying dollars to state-owned oil companies and tightening foreign exchange derivative rules to stabilize the currency.
The RBI's intervention aims to reduce spot-market dollar demand amid sustained rupee depreciation driven by high crude oil prices, elevated US yields, and foreign portfolio outflows. The central bank's measures have helped the rupee appreciate nearly 1 percent to Rs 95.77 per dollar on October 12. However, the reserves to external debt ratio declined from 90.6 percent at end-March 2026 to 85.9 percent at end-June, indicating a weakening coverage buffer.
This drawdown in reserves marks a significant challenge for the RBI as it balances currency stability with preserving its reserve buffer. India's forex reserves remain substantial but the recent decline underscores vulnerabilities amid global economic pressures. The RBI's strategy to supply dollars to oil marketing companies and clamp down on speculative foreign exchange activities reflects efforts to manage external shocks and maintain market confidence.
The RBI’s latest data shows the reserves stood at $734.60 billion as of October 2, with the rupee recovering slightly to Rs 95.77 per dollar by October 12, highlighting ongoing efforts to stabilize the currency amid external pressures.