The rupee fall became strong in March as global pressure increased. The Reserve Bank of India took quick action to control the situation. Market estimates showed RBI intervention of about $26 billion to $27 billion during the month.
The rupee touched its weakest level ever near 93.94 against the US dollar on March 23. It had already closed at 93.71 on March 20. This was the biggest one-day fall in more than four years. The trend stayed weak through the month.
Crude oil prices created major pressure. Prices moved above $110 per barrel after tensions in West Asia increased. India buys most of its oil from outside. Higher prices increased the country’s import cost. This pushed the rupee fall further.
FPI outflows added more pressure. Foreign investors sold shares worth Rs. 88,180 crore in March till March 20. Selling also happened in bonds. Investors pulled out Rs. 13,027 crore from government securities. This showed weak market mood.
RBI intervention aimed to stop sudden and sharp moves in the rupee. The central bank sold dollars in the market to support the currency. It also used forward deals to manage pressure. Reports showed the forward dollar position moved close to $100 billion.
Forex reserves saw a drop during this period. Reserves fell by more than $11 billion in early March. The total stood near $716 billion. This drop showed the impact of strong RBI intervention.
The central bank also worked to keep the bond market stable. It bought bonds worth Rs. 1 lakh crore to manage cash flow. This helped keep bond yields steady even as foreign investors sold.
Experts believe the rupee may stay weak for some time. Many expect it to move between 93.25 and 94.25 in the short term. Some also see a chance of the rupee touching 95 if crude oil prices remain high and FPI outflows continue.
The situation shows a clear balance. RBI intervention helps slow the rupee fall. But it also reduces forex reserves. Long-term factors like oil imports still affect the currency.
The next move will depend on global trends. Oil prices, foreign flows, and global tensions will guide the direction. The RBI may step in again if sharp moves appear.