ndia’s foreign exchange reserves have fallen by $38 billion since February because the RBI fights to handle volatility however analysts warn the slide could not be over
The Indian rupee breached the 96 mark against the US greenback on Monday, extending a relentless slide pushed by surging crude oil costs, persistent overseas institutional investor (FII) outflows, and a strengthening greenback index now hovering close to the 98–99 degree.
Chatting with ET Now, Naveen Mathur, Director of Commodities, Currencies and Worldwide Enterprise at Anand Rathi Shares, flagged the compounding nature of the strain. “The greenback index power, the inner issues with respect to the present account deficit due to excessive oil costs, and persistent FII outflows, all these elements are making strain on the rupee,” he mentioned.
Oil is the core drawback
India imports roughly 85% of its crude oil from abroad, making the rupee acutely delicate to international power costs. With Brent crude at $109 per barrel and WTI at $104, India’s personal crude basket is estimated at $150, a degree that retains the present account deficit huge and greenback demand elevated.
The Western Asia disaster, together with tensions round Iran, has saved a agency flooring underneath oil costs, with no significant cooldown in sight. If costs stay above $100 per barrel and the RBI steps again from intervention, Mathur warned that the rupee might discover a degree of round 102 against the greenback.
RBI has spent $38 billion; $28 billion in March alone
India’s overseas change reserves have dropped from roughly $728 billion earlier than the battle started to round $690 billion, a drawdown of almost $38 billion. Critically, $28 billion of that was deployed in March alone, highlighting the size of the RBI’s market operations.
Regardless of the heavy spending, the central financial institution has been specific that it isn’t defending any particular degree for the rupee. Its said goal is to forestall extreme volatility slightly than peg the foreign money at a set price. India at present holds about 11 months of import cowl, offering some buffer, however the tempo of reserve depletion has raised questions on how lengthy lively intervention can proceed.
The FII image provides a separate layer of stress. In March alone, overseas buyers pulled out roughly $11 billion from Indian markets — greater than half the $19 billion in outflows recorded throughout all the calendar 12 months 2025. Mathur attributed this much less to India’s fundamentals, which he described as comparatively robust, and extra to a broader international risk-off sentiment driving capital towards safe-haven belongings.
“It’s extra of a worry issue despite fundamentals remaining robust,” he famous. “It’s the geopolitics which is making folks jittery.”
Commerce stability information reinforces the priority. India’s commerce deficit widened to roughly $283 million within the newest studying, up from $259 million the prior month, one other indicator of sustained greenback outflows.
The place does the Rupee settle?
Mathur drew parallels to earlier foreign money stress episodes in 2013 and 2022, each of which the rupee ultimately navigated. His base case is that the foreign money consolidates across the 95–96 vary as soon as international circumstances stabilize however the timeline relies upon closely on whether or not oil costs cool and FII sentiment turns.
For now, the RBI’s technique stays one in all managed volatility, smoothing the descent with out drawing a line within the sand.
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