RBI Battles to Save the Rupee: Inside India’s High-Stakes Currency War
The Indian rupee is fighting for its life as 2025 draws to a close, currently hovering in a white-knuckle range between ₹89.80 and ₹90.00 against the US dollar. After a terrifying plunge to a record low of ₹91.07 earlier this month, the Reserve Bank of India (RBI) has stepped in with a massive $5 billion intervention. This high-stakes defense aims to stabilize a currency rocked by stalled trade deals and global market jitters.
The Great Currency Stand-off
For Indian importers and travelers, December has been a month of pure adrenaline—and not the good kind. The rupee has been caught in a "perfect storm" of global and domestic pressures that recently pushed it past the psychologically bruising ₹90-mark. On December 16, the currency hit a historic floor of ₹91.07, a move that sent shockwaves through the Mumbai trading floors.
This wasn't just a random dip; it was the result of a “trade deal limbo” with the United States and a relentless exit of foreign funds. As investors pulled their money out, the rupee began a freefall that forced the central bank to abandon its usual “light-touch” approach for something much more aggressive.
RBI’s Guerilla Tactics
The recovery we see today—with the rupee stabilizing near ₹89.80—is far from organic. It is a “manufactured stability” bought with billions of dollars from India's forex reserves. The RBI has shifted its strategy to a more “heavy-handed” defense, specifically targeting the offshore Non-Deliverable Forward (NDF) markets. By attacking speculative bets offshore, they are killing the “short” positions before they can even hit the local markets.
Traders report that the central bank has been intervening almost immediately after the market opens. This “early bird” strike is designed to catch speculators off guard and prevent a one-way slide. However, this defense comes at a cost. By selling dollars to buy rupees, the RBI has sucked liquidity out of the banking system, leading to a massive deficit of over ₹60,000 crore in mid-December.
The Double-Barreled Response
To keep the economy from choking on a lack of cash, the RBI has launched a two-front war. While one hand defends the currency, the other is pumping cash back into the system through a ₹1 lakh crore Open Market Operation (OMO). It is a delicate balancing act: keep the rupee strong enough to prevent inflation, but keep the banks liquid enough to support growth.
For now, the RBI has drawn a “line in the sand” at the ₹91.00 level. While the volatility is a nightmare for importers facing rising hedging costs, the central bank’s decisive actions have at least provided a temporary floor. Whether this stability can hold through 2026 remains the $64 billion question.
Key Updates or Developments
- New Historic Low: Rupee touched ₹91.07 on Dec 16, 2025. Source
- Massive Intervention: RBI sold an estimated $5 billion. Source
- Liquidity Injection: ₹1 lakh crore OMO announced. Source
- Current Standing: Rupee stabilizing around ₹89.79–₹89.96. Source
Why This Is Trending
The “Rupee at 90” milestone is more than a number; it’s a psychological trigger for the Indian public. People are discussing it online because it directly affects fuel prices, electronics, foreign education costs, and business imports. The RBI’s unusually aggressive crackdown on offshore speculators has also raised eyebrows among global economists, making it a major trending topic worldwide.
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