The Reserve Bank of India (RBI) has undertaken the most significant action in its history to stabilize the Indian rupee against the U.S. dollar, marking a major shift in its currency market strategy. In October 2025, the central bank aggressively intervened by selling large volumes of U.S. dollars through state-run banks, aiming to curb speculative pressure and strengthen the domestic currency.
This intervention came after weeks of volatility, during which the rupee neared record lows against the greenback. Traders noted that RBI’s decisive move—reminiscent of a similar defense earlier in the year—effectively eliminated excessive short positions against the rupee and reassured markets of the central bank’s commitment to maintain stability.
The rupee surged by nearly 0.8% in a single day, marking its best performance in four months, and recovered from the brink of historic lows near 88.80 per dollar to levels around 87.75. Importantly, RBI’s proactive pre-market dollar sales set the tone for trading sessions, reinforcing the rupee’s footing and signaling a new floor near 88 for the currency’s value.
Analysts suggest that RBI’s actions were driven by concerns over speculative attacks and the need to protect India’s import-dependent economy from excessive currency swings. This move also coincided with increased foreign portfolio inflows and improved market sentiment regarding trade prospects.
While questions remain on whether this intervention will spark a sustained recovery or merely a short-term correction, markets have welcomed the RBI’s assertiveness in managing volatility and defending the rupee’s value amid ongoing global uncertainties.
This historic RBI intervention highlights India’s growing role in actively managing its currency markets to balance domestic economic needs and global financial pressures.