RBI Sells-Off USD 34.5 Billion In FY25, Highest Since 2008 Fiscal Crisis

India's central bank sold USD 34.5 billion in the fiscal year 2024-25 (FY25) on the net basis, reportedly the highest since the global financial crisis back in 2008-09, the latest data released by Reserve Bank of India (RBI).

Additionally, RBI has cut down its forward book for the first time in the last seven months, which fell to USD 84.34 billion as against USD 88.75 billion in February. 

After a period of relative stability of almost two years, the Indian rupee (INR) experienced a sharp depreciation in the latter half of FY25, primarily due to a surge in the US dollar index to 108, prompting the central bank to intervene in the foreign exchange market to curb undue volatility.

The rise in dollar index was driven by inflationary concerns following US President Donald Trump's assumption of office. 

The RBI had net sold the highest amount of USD 20 billion in November 2024. The rupee depreciated by 2.4 per cent in the fiscal year 2025.

In response to the panic triggered by Trump’s trade policies, the RBI net sold approximately USD 43 billion in the second half of FY25 to curb volatility, as the rupee plunged to a low of 87.95 per dollar in February this year.

India’s foreign exchange reserves also fell from USD 705 billion in the last week of September 2024 to below USD 625 billion in January 2025.

Reportedly, V R C Reddy, head of treasury at Karur Vysya Bank, said, "US dollar initially strengthened following Trump’s election victory on expectations of pro-growth policies. However, starting January 2025, the dollar lost steam as tariff and tax announcements on foreign countries raised trade war concerns, weighing on the US economy."

“This shift supported emerging market currencies, with the Indian rupee appreciating sharply from 87.95 (February 10) to 83.75 (May 2),” he said

The RBI has been a net seller of dollars since October 2024. Although, it was a net buyer of dollars in the first half of FY25 (April-September), with $8.52 billion worth of US dollars purchased during the period. In FY24, the central bank had net bought USD 41.27 billion.

The central bank is expected to transfer a surplus between Rs 2.5 trillion and Rs 3 trillion for FY25, against Rs 2.1 trillion in FY24.

The RBI had net bought the highest amount in March 2025 when the rupee regained strength against the dollar,  supported  by inflows after hitting new lows earlier in the  same year. 

These measures are intended to inject rupee liquidity into the banking system while also supporting the rupee amid global uncertainties. As a result, the rupee strengthened significantly in March, recovering from nearly 88 per dollar to regain all losses for the calendar year (CY25).