RBI Sells Record Nearly $400Bn in Forex to Defend Rupee in FY25

The Reserve Bank of India (RBI) sold a record $398.71bn of foreign currency in 2024-25 on a gross basis as the central bank interfered in the forex market to defend a depreciating rupee. This marks a sharp increase from $153.03bn sold in the last financial year, breaking the previous record of $212.57bn in 2022-23, The Indian Express reported citing RBI's monthly bulletin.

To be sure, the RBI made aggressive foreign currency purchases last year, but it still ended up as a net seller, offloading $34.51bn in the 12 months ending March 2025. This marks only the seventh instance in the past three decades—for which data is available—where the central bank sold more foreign exchange than it bought in a financial year. Notably, the quantum of net sales in 2024-25 is second only to the $34.92bn the RBI sold during 2008-09, at the peak of the global financial crisis.

The regulator sold $69.05bn of foreign currency in December 2024, marking the highest number it has ever sold in a month. The central bank sold 73% of its full-year gross sales, approximately $291.03bn, during the second half of FY25.

The RBI’s efforts to stabilise the rupee came at a significant cost too. Between late September 2024 and mid-January 2025, India’s forex reserves dropped by nearly $80bn, falling below the $625bn mark.

Rupee's Turbulent Time

After Donald Trump cemented his victory for a second time in November last year, the domestic currency witnessed a turbulent time. In February, the rupee slumped to a new all-time low of 87.95 per US dollar as fears over potential US trade tariffs rattled regional currencies.

Earlier, RBI Governor Sanjay Malhotra decided the rupee to move freely in tandem with peers in the region while still intervening in the forex market to curb excessive moves. Malhotra's stance was opposite to his predecessor, Shaktikanta Das, who kept a tight rein on the currency.