Reserve Bank of India sells $9.8B in March as rupee posts steepest monthly drop since 2019

India’s central bank offloaded a net $9.76 billion in the foreign exchange market during March 2026, its most aggressive intervention in years. The move came as the rupee tumbled 4% against the US dollar in a single month, its worst performance since 2019.

The trigger: escalating conflict involving Iran that sent global crude prices climbing and drove foreign capital out of emerging markets at a pace that forced the Reserve Bank of India to step in with both hands.

The numbers tell a stark story

The $9.8 billion in net dollar sales represented a sharp reversal for the RBI, which had actually been a net buyer of dollars in January and February.

But the spot market sales only tell part of the story. The RBI’s forward dollar sales outstanding surged from $77.7 billion at the end of February to $103.06 billion by end of March. That $25.36 billion jump in forward commitments signals the central bank was deploying every tool available to stabilize the currency.

Why Iran matters so much for India

India is the world’s third-largest oil importer. When geopolitical disruptions push crude prices higher, India’s import bill swells, its current account deficit widens, and its currency comes under pressure.

The Iran conflict did exactly that. Higher energy costs meant more dollars flowing out of India to pay for oil, while simultaneously foreign institutional investors pulled capital out of Indian markets as risk appetite evaporated across emerging economies.

By mid-May 2026, the rupee had weakened approximately 7% year-to-date against the US dollar. Rising import costs feed directly into domestic inflation, which constrains the RBI’s ability to cut interest rates to support growth.

What this means for investors

The forward book ballooning to $103 billion is particularly worth watching, because those are future obligations that will need to be met regardless of what happens to reserves in the interim.

For foreign investors in Indian equities and bonds, the rupee’s trajectory changes the math on returns. A stock portfolio that gains 10% in rupee terms but loses 7% on the currency conversion delivers a much less impressive result.

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