The Reserve Bank of India (RBI) stepped up its defence of the national currency in October 2025, selling a substantial amount of US dollars to curb volatility and provide stability. Fresh data from the central bank's December bulletin reveals the scale of its operations across different market segments to act as the primary stabilising force.
Spot Market Intervention Intensifies
In the over-the-counter (OTC) or spot market, the RBI's activity surged dramatically. Gross dollar purchases skyrocketed by 704% to $17.7 billion in October, up from just $2.2 billion in September. However, this was overshadowed by an even larger selling spree. Gross dollar sales rose by 192% to reach $29.6 billion in the same month.
This aggressive action resulted in net dollar sales of $11.9 billion for October 2025. This figure marks a significant 50% increase from the $7.9 billion in net sales recorded in September, highlighting the central bank's stronger intervention to counter mounting pressure on the rupee.
Cumulatively, the RBI's efforts in the financial year 2024-25 (FY25) up to October have been substantial. The total net dollar sales during this period stood at $34.5 billion, which translates to approximately Rs 2,91,233 crore based on contract rates.
Strategic Use of Forward Contracts as a Buffer
Beyond immediate spot market actions, the RBI strategically leaned on forward contracts to shape market expectations without depleting its foreign exchange reserves upfront. By the end of October, the outstanding net forward sales position increased by 7.1% to $63.6 billion, compared to $59.4 billion at the end of September.
This growing forward book acts as a powerful signal and a buffer for the currency market. It reassures participants that the central bank has committed to supplying dollars in the future if needed, thereby helping to anchor the rupee's value and manage speculative pressures.
Neutral Stance in Futures, Defending the Rs 89 Level
In the exchange-traded currency futures market, the RBI maintained a neutral net position in October. It executed buy and sell transactions of $2.3 billion each, resulting in no net purchase or sale for the month. Despite this neutrality, trading activity witnessed a sharp 73.5% jump in volumes from September. The outstanding net futures sales position declined by 9.8% to $1.4 billion by the end of October.
The intervention data provides clues about the RBI's intended defence line for the rupee. Analysis suggests the central bank was actively working to prevent the rupee from depreciating to the 89 level against the US dollar. The effective intervention price in October was around Rs 88.25 per dollar, only marginally lower than the Rs 88.35 rate in September, despite the massive increase in dollar sales.
This indicates a concerted effort to shield the currency from breaching the Rs 89 mark during a period of heightened volatility. For context, the average intervention rate for FY25 up to October was lower, at about Rs 84.39 per dollar. This broader depreciation in late 2025 is attributed to global factors like trade tensions and capital outflows from emerging markets.
The RBI's multi-pronged strategy, combining heavy spot sales with a bolstered forward position, underscores its proactive role in ensuring orderly market conditions and mitigating excessive rupee volatility amid challenging global economic crosscurrents.
