Exchange Rate Management
RBI's Role and Instruments
The RBI operates a managed float exchange rate regime for the rupee — meaning the exchange rate is primarily market-determined, but the RBI intervenes to reduce excessive volatility. This is distinct from a fixed exchange rate (rate pegged to a reference currency/basket) or a fully free float (no intervention).
- RBI's primary intervention tool: selling US dollar reserves (from India's foreign exchange reserves) in the market to support the rupee; buying dollars when the rupee appreciates excessively.
- As of March 2026, India's foreign exchange reserves were estimated to have depleted — the RBI sold over $15 billion during March 2026 alone to partially cushion the rupee's fall.
- India's forex reserves had peaked at approximately $700 billion in late 2024 before the conflict began eroding them.
- The RBI publishes Weekly Statistical Supplement data on forex reserves, covering: Foreign Currency Assets (FCAs), Gold, SDRs (Special Drawing Rights), Reserve Position in IMF.
- SDRs: India's SDR allocation from the IMF; part of India's reserve assets and can be used in emergencies.
- The 1991 Balance of Payments crisis was triggered partly by near-depletion of forex reserves — a historical reference point for why forex management matters for India.
● Tracked since March 23, 2026 · last seen April 24, 2026 · updates as the daily brief publishes
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