The Reserve Bank of India (RBI) sold $34.5 billion on a net basis in fiscal year 2024-25 (FY25), the highest since the global financial crisis of 2008-09, according to the most recent data released by the central bank. Furthermore, the RBI lowered its forward book from $88.75 billion in February to $84.34 billion as of March 31, 2025, marking the first reduction in seven months.
Key Highlights
- RBI's net sales in FY25 reached $34.5 billion, the highest since the 2008-09 crisis.
- To stabilize the rupee amid global volatility, RBI sold a record $398.71 billion in forex.
In the latter half of FY25, the Indian rupee (INR) experienced a significant depreciation after almost two years of relative stability. This was mainly caused by an increase in the US dollar index to 108, which prompted the central bank to intervene in the foreign exchange market in order to curb excessive volatility.
Concerns about inflation pushed the dollar index higher after US President Donald Trump took office.
In November 2024, the RBI sold the most, totaling $20 billion net. The rupee fell by 2.4% in FY25.
As the rupee dropped to a low of 87.95 per dollar in February of this year, the RBI net sold roughly $43 billion in the second half of FY25 to mitigate the panic brought on by Trump's trade policies.
From $705 billion in the last week of September 2024 to less than $625 billion in January 2025, India's foreign exchange reserves also declined.
"The US dollar initially strengthened after Trump's election victory on expectations of pro-growth policies. However, beginning in January 2025, the dollar lost steam as tariff and tax announcements on foreign countries fueled trade war fears, weighing on the US economy," said V R C Reddy, head of treasury at Karur Vysya Bank. "This shift supported emerging market currencies, with the INR appreciating sharply from 87.95 (February 10) to 83.75 (May 2)," said Singh.
The RBI has been a net seller of dollars since October 2024. However, it was a net buyer of dollars in the first half of FY25 (April-September), purchasing $8.52 billion in US dollars during that period. In fiscal year 24, the central bank net bought $41.27 billion.
Furthermore, market analysts predict that the central bank will transfer a record surplus to the government as a result of the significant dollar sale this year. During FY25, the RBI gross sales totaled approximately $399 billion. The rupee experienced significant volatility this year, allowing the RBI to capitalise on dollar sales and record gains, they said.
"The high dollar sale will be the basis for the record dividend from the RBI to the government this year," said Madan Sabnavis, chief economist at Bank of Baroda. "The gross numbers are quite higher than net sale data," headded.
In FY25, the central bank expects to transfer a surplus of ₹2.5 trillion to ₹3 trillion, up from ₹2.1 trillion in FY24.
The RBI net bought the most in March 2025, when the rupee regained strength against the dollar, boosted by inflows after reaching new lows earlier in the year. The RBI conducted buy/sell swap auctions and intervened in the foreign exchange market to lower volatility. These actions supported the rupee in the face of international uncertainty and helped inject rupee liquidity into the banking system. In order to make up for all of the calendar-year losses (CY25), the rupee recovered from almost 88 to the dollar in March.
