Rupee Slides 0.7% as Central Bank Sells $9.7 Billion in November
In November 2025, the Indian rupee weakened by 0.7% against major currencies. To control the fall, the Central Bank, the Reserve Bank of India (RBI), net sold $9.7 billion in foreign exchange. This was one of the biggest interventions in recent months. Such a move matters because it affects inflation, import costs, and market confidence.
What Happened in November?
- RBI FX Intervention: In November 2025, RBI bought $14.3B and sold $17.6B, resulting in a net sale of $9.7B.
- Comparison with October: The net sale was lower than October’s $11.8B, but still large.
- Reason for Intervention: RBI sold dollars to prevent sharp rupee depreciation.
- How It Works: Net selling dollars increases dollar supply, which supports the rupee by meeting demand.
- Forward Positions: RBI’s short dollar forward position rose to $66B by the end of November.
- Why Forward Positions Matter: These positions help RBI manage future expectations and reduce volatility.
Why Did the Rupee Fall?
- Dollar Demand Outpaced Supply: Importers needed more dollars than exporters supplied. This weakened the rupee.
- Foreign Portfolio Outflows: Foreign investors pulled money out, reducing dollar inflows. This added pressure on the rupee.
- Global Dollar Strength: The US dollar stayed strong due to safe-asset demand. This made the rupee weaker in comparison.
- Trade Imbalance: A wider trade deficit meant more dollars leaving the economy, pushing the rupee down.
- Combined Effect: These factors made the rupee vulnerable, forcing the Central Bank to act.
Impact on the Economy
- Inflation Pressure: A weaker rupee makes imports costlier. This can push inflation higher.
- Cost of Goods: Prices of fuel, electronics, and raw materials can rise. This increases living and production costs.
- Trade Balance Effect: Exports may become cheaper abroad. But imports get more expensive.
- Market Sentiment: Currency volatility can hurt investor confidence.
- Current Trend: In early 2026, the rupee was near multi-month lows, showing ongoing pressure.
What the Central Bank Is Trying to Achieve
- Stabilize Exchange Rate: RBI wants to limit sharp rupee falls.
- Reduce Volatility: Intervention aims to calm market swings.
- Boost Confidence: RBI action signals stability to investors.
- Dollar Injection: Net sales of $9.7B provided more dollars to the market.
- Forward Strategy: Rising forward positions shape future expectations.
- Trade-Off: Heavy use of reserves can limit the RBI’s future flexibility.
What’s Next?
- Trade & Capital Flows: If exports grow or investment returns, the dollar supply may improve.
- Central Bank Actions: RBI may use spot sales or FX swaps to manage volatility.
- Global Conditions: Strong US data or geopolitical risks can strengthen the dollar.
- Key Indicators to Watch: Trade balance, portfolio flows, and reserves will guide the next moves.
Conclusion
The Central Bank’s net sale of $9.7 billion in November was a major policy move to counter the rupee’s 0.7% slide. It highlights how currency markets respond to shifts in global demand, trade flows, and investor behavior. While the intervention helped slow depreciation, continued volatility shows persistent underlying pressures. For businesses and consumers, currency swings affect prices, costs, and economic planning. For policymakers, balancing exchange-rate stability with broader economic goals remains a key challenge.
FAQS
The rupee fell mainly due to higher dollar demand, foreign outflows, and a strong US dollar.
RBI sold dollars to support the rupee and prevent sharp depreciation.
Net sale means RBI sold more dollars than it bought, resulting in a total net outflow.
The rupee will depend on trade flows, investor inflows, and global dollar strength.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
