RBI Steps Up Offshore Market Intervention to Support Rupee Amid U.S. Tariff Pressures

The Reserve Bank of India (RBI) has intensified its intervention in the offshore non-deliverable forwards (NDF) market to stabilise the Indian rupee, which recently plunged to record lows following tariff measures by the United States. According to central bank data, this effort reflects the RBI’s commitment to curb excessive volatility and maintain orderly currency movements.

RBI Intensifies NDF Market Intervention

Experts noted that short positions in the NDF market surged in August, indicating heightened speculative activity. Short positions in the up-to-one-month segment increased to $5.8 billion in August from $2.5 billion in June, marking a significant build-up in nearly five months. Similarly, positions in the one-to-three-month segment rose to $14.4 billion from $11.8 billion during the same period. The central bank’s active presence in the market is aimed at countering these pressures and preventing further depreciation.

Rupee Under Pressure Amid U.S. Tariffs

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The rupee’s recent decline comes after the U.S. administration imposed higher tariffs on Indian goods, adding stress to export-oriented sectors and raising concerns about capital flows. Market analysts believe that while the RBI’s interventions have provided temporary relief, external factors such as trade policies and global risk sentiment continue to weigh on the currency.

Experts See Continued Volatility Ahead

In addition to NDF interventions, the RBI is closely monitoring market liquidity and foreign exchange demand to maintain stability. Analysts highlight that sustained support from the central bank is crucial, given the combination of external tariff shocks and rising short positions in the offshore market. “The RBI’s measures are essential to mitigate excessive speculative activity and protect the rupee from sharp fluctuations,” said a senior currency strategist.

Experts warn that although the actions have helped curb excessive volatility, the INR/USD downward pressure is likely to continue until international trade policies are clarified and capital inflows increase. Any sustained change in the value of the currency may have an impact on inflation, import prices, and the stability of the financial system as a whole.

Conclusion

Increased involvement in the NDF market by the Reserve Bank of India highlights its aggressive stance in defending the rupee in the face of growing external challenges. Even if short-term currency stabilisation has been achieved through interventions, continued global uncertainty will require constant attention to preserve investor confidence.