RBI sold nearly $400 billion of foreign currency in FY25, sharply higher than previous fiscal
The Reserve Bank of India sold a record $398.71 billion of foreign currency in 2024-25 on a gross basis as the Indian central bank stepped up its defence of the rupee amid a volatile global environment. The RBI's sale of foreign currency in the spot market in the last financial year was sharply higher than the $153.03 billion it had sold in 2023-24 and the previous record of $212.57 billion in 2022-23, data released late Wednesday by the central bank showed.
To be sure, the RBI also bought foreign currency heavily last year, resulting in a net sale of $34.51 billion for the 12 months ended March 2025. However, this was only the seventh time in the last three decades – data for which is available – that the central bank sold more foreign currency in a year than what it bought. Further, the $34.51 sold on a net basis in 2024-25 is second only to the $34.92 billion sold in 2008-09 during the global financial crisis.
Turbulent year
After a fairly stable couple of years, the rupee began weakening sharply in the second half of 2024-25 as it became increasingly likely Donald Trump would return to the White House as president of the US for a second term. The RBI's interventions in the currency market peaked in December 2024 when it sold a massive $69.05 billion – the most it has ever sold in a month.
All in all, the RBI sold $291.03 billion – or 73 per cent of its full-year gross sales – in the second half of 2024-25 as the panic caused by Trump's protectionist trade policies pushed the rupee to an all-time low of 87.95 per dollar in early February 2025.
Falling reserves
The RBI's defence of the rupee was not without its cost, with India's foreign exchange reserves slumping by around $80 billion betweeen late September 2024 and mid-January 2025 to under $625 billion. To attract more capital inflows, the then RBI governor, Shaktikanta Das, announced in December 2024 that the ceiling on interest rates banks can offer on so-called Foreign Currency Non-Resident (Bank) – or FCNR(B) – deposits was being raised by 150 basis points until March 2025. One basis point is a hundredth of a percentage point.
However, data released Wednesday by the RBI showed the relaxation seems to have made very little difference, with total inflows in the aforementioned FCNR(B) deposit scheme in 2024-25 amounting to $7.08 billion compared to $6.37 billion in 2023-24.
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