RBI’s Plan After Rupee’s Fall Against US Dollar Comes Into Focus

After the rupee’s sharp slide, the RBI has chosen temporary forex curbs, reserve-backed support and a volatility-control strategy instead of defending any fixed dollar level.

The rupee’s recent fall against the US dollar pushed the central bank into action at a time when global markets were already unsettled by West Asia tensions, rising oil risk and foreign outflows. The key point is this: the RBI is not trying to defend one exact exchange rate. 

Governor Sanjay Malhotra said the aim is to reduce excess volatility and restore orderly trading conditions. After hitting record pressure, the rupee recovered and closed at 92.58 per US dollar on 8 April 2026, helped by lower oil prices and improving risk appetite.

How RBI Is Responding To The Rupee Slide?

The main story is the RBI’s short-term market intervention. Malhotra said recent curbs on banks’ forex positions and non-deliverable forwards are temporary. 

Reuters reported that banks were placed under a $100 million cap on net open dollar-rupee positions to cool speculation and reduce arbitrage pressure. This was a tactical response, not a long-term policy shift. 
 

The RBI is also relying on reserves to reassure markets. India’s forex reserves stood at $697.1 billion as on 3 April 2026, enough to cover around 11 months of imports. That gives the central bank room to smooth disorderly moves even after reserves fell from a record $728.49 billion in February 2026.

What Happened Before This?

The rupee had been under strain for days before the governor’s remarks. Reuters reported that on 6 April 2026 it ended near 93.06 per US dollar after volatility linked to importer hedging, capital outflows and the offshore forwards market. One-year USD/INR implied yield had climbed as high as 3.96% before easing.

Later, sentiment improved. Oil prices dropped 14% after ceasefire news, and that gave the rupee breathing room. The broader macro backdrop, however, remains tight. India imports 90% of its oil, while Reuters reported foreign capital outflows of $19 billion. The current account deficit stood at $13.2 billion, or 1.3% of GDP, in Q3 FY26, while the balance of payments deficit narrowed to $24.4 billion from $37.7 billion a year earlier.
 

LoansJagat also noted that the RBI stepped in to support the rupee by tightening forex exposure and limiting speculative pressure in the market.

What Stakeholders Are Saying

Malhotra said the curbs are temporary and do not change the broader push towards market development. Traders cited by Reuters expect near-term support in the 92 to 93 range, while HDFC Bank sees 94 to 96 by the end of FY27. 

Mint, meanwhile, flagged that the rupee’s weakness reflects both temporary oil shock and deeper structural pressure.

Conclusion

The RBI’s plan is clear: contain volatility first, avoid panic and use reserves carefully.
For now, it is managing the rupee’s fall, not defending a fixed number.