MC EXCLUSIVE RBI skips dollar purchases in July for first time in over a decade as rupee pressure mounts

Reserve Bank of India

The Reserve Bank of India (RBI) skipped purchasing dollars from the forex spot market in July, a first in more than 11 years as the rupee came under heavy pressure. It sold $2.54 billion during the month to stabilise the rupee, RBI data shows.

Before July, February 2014 was the last zero-dollar purchase month for the RBI.

“The RBI did not purchase any US dollars in July 2025 because of significant pressure on the Indian rupee, which led the RBI to intervene by selling dollars to stabilise the currency rather than buying them,” said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

As the RBI did not purchase dollars, India’s foreign exchange reserves fell to $688.871 billion on August 1 from $699.736 billion on July 4.

India's foreign exchange reserves consist of foreign currency assets, gold reserves, the special drawing rights (SDRs) and the reserve position in the International Monetary Fund.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the reserve.

In July, the rupee depreciated by 2.23 percent, the biggest drop for any month in 2025. The slide came on the back of a 1.21 percent drop in May, 1.16 percent in January and 1.02 percent in February.

The strategy to not buy but sell dollars represents a shift from typical reserve accumulation (dollar buying) toward defensive operations in support of currency stability, using both spot and forward markets to manage exchange rate volatility, experts said.

On September 24, Moneycontrol wrote the RBI has become conservative and selective in its interventions in the spot currency market despite the rupee sinking to an all-time low multiple times.

The rupee, which has been under pressure amid external shocks from the start of this fiscal, has depreciated around 3.65 percent in FY26 so far.

Similarly, year-to-date, the currency has depreciated 3.48 percent against the dollar. The depreciation is the highest after two financial years.

Uncertainty over US tariffs, prolonged Russia–Ukraine war and confrontation between Israel and Iran all contributed to the fall.

Domestic factors such as foreign investor outflows were also a contributing factor.

US President Donald Trump’s 50 percent tariff, one of the highest in the world, on Indian goods, which kicked in on August 27, have dampened dollar inflows and hit market sentiment, reducing export competitiveness and revenue.