₹93.88 per Dollar and counting: Why RBI is betting on Foreign Bonds now?

Key Takeaways 

1. The RBI is considering a plan where state-owned banks may issue foreign currency bonds, likely with 5-year maturities. The purpose is to bring more dollars into India and support the weakening rupee. No final decision has been taken yet. 
2. India has used similar measures before. SBI raised $5.5 billion through India Millennium Deposits in 2000. Resurgent India Bonds raised nearly $5 billion from NRIs during the East Asian crisis in 1998. 

Why is the Rupee falling?

The rupee weakened by nearly 9% in FY 2025-26 and closed at ₹93.88 per US dollar on March 24, 2026. The RBI sold a net $50.8 billion in forex markets to slow the fall between April 2025 and January 2026. The constant dollar selling reduces reserves and cannot continue forever.

RBI officials are discussing a proposal for state-owned banks to issue foreign currency bonds with 5-year maturities to manage this pressure. 

The RBI is also considering forex swaps for these banks, helping them offer better returns to investors. However, high global dollar interest rates may force the RBI to provide a larger subsidy to attract investors.

How will this affect Indians?

A stronger rupee can directly help people by keeping imported goods cheaper. India depends on imports for nearly 85% of its oil needs. 

Crude oil imports increased 6% to $14.4 billion in December 2025. The country’s overall trade deficit reached $25.04 billion during the same month. 

Here is the list of RBI interventions over the years and their scale:

India has repeatedly used special financial measures during periods of rupee pressure and external economic stress. 

What are the experts saying?

Nomura economists Sonal Varma and Aurodeep Nandi highlighted the urgency of the situation. They said the RBI’s short-forward book stood at $77.7 billion at the end of February. They also estimated that the RBI sold nearly $18.3 billion in spot reserves between March 1 and March 27.

The economists warned that any new bond scheme must consider high global dollar rates. A bigger subsidy may be needed to attract investors.

India’s merchandise trade deficit widened from $91 billion in April-February 2024-25 to $109 billion during the same period in 2025-26. 

India’s outstanding external commercial borrowings stood at $44.36 billion in December 2025. This increases repayment pressure when the rupee weakens further.

Conclusion

The RBI’s foreign currency bond proposal is still at the discussion stage. It could bring fresh dollar inflows and reduce pressure on the rupee. However, experts believe this is only a short-term solution. Long-term stability will require stronger exports, lower import dependence, and better capital inflows.

FAQs

1. Is the RBI planning more foreign investment measures to support the rupee?

The RBI is discussing foreign currency bond proposals to attract dollar inflows. However, no official decision has been announced on buying foreign corporate bonds yet.

2. Why has the RBI not increased the foreign mutual fund investment limit?

The RBI has kept the cap unchanged to manage foreign exchange outflows and reduce pressure on India’s forex reserves and the rupee.