The RBI Spent $12 Billion in a Week. Here Is What It Bought.

When the rupee hit 93.28 per dollar, the RBI sold dollars at a pace rarely seen before. It did not stop the fall. That was never the plan.

A bad week for the rupee

On March 20, the rupee touched a record low of 93.28 per dollar. Oil above $100 meant India needed far more dollars to pay for imports, and foreign investors were pulling money out of Indian shares at the same time. Estimates suggest the RBI sold around $12 billion of its reserves that week, selling dollars and buying rupees to slow the slide.

Twelve billion dollars is a huge sum, roughly ₹1.1 lakh crore. Many people I spoke to asked a fair question: if the RBI spent all that, why did the rupee still fall? The answer is that currency intervention is usually about speed, not direction.

What intervention is for

Imagine a crowded staircase where everyone starts running down at once. Someone standing in the middle cannot stop the crowd from going down, but they can slow it so nobody falls. That is closer to what the RBI does. When everyone wants dollars at the same moment, the rupee can fall by 2% or 3% in a day. Panicked moves like that hurt importers, borrowers with dollar loans and anyone trying to plan. Selling reserves gives the market a buyer for rupees and turns a crash into a slide.

Trying to hold one exact level would be much more dangerous. If the market believed the RBI would defend 92 no matter what, traders would bet against it, knowing the RBI must eventually run out of dollars. Several countries have lost most of their reserves this way. India’s approach, letting the rupee move while smoothing the speed, avoids giving speculators an easy target.

Can it keep doing this?

India entered 2026 with some of the largest foreign exchange reserves in the world, well above $700 billion. That buffer exists precisely for weeks like this. But reserves are not unlimited, and spending them is only a bridge to something else. The real fix for the rupee is fewer dollars leaving, through lower oil prices or the war ending, and more dollars arriving, through exports and foreign investment.

The week taught me that a central bank’s power is narrower than people assume. The RBI cannot set the value of the rupee by decree. It can buy time, and it can make sure that when the rupee falls, it falls in an orderly way. Most of the time, that is exactly the job, and judging it by whether the rupee went down misses what it was actually trying to do.