India’s central bank has significantly stepped up interventions in offshore currency markets in a bid to stabilize the rupee, Bloomberg reported, citing sources familiar with the matter. Over the past two to three weeks, the central bank has built short dollar positions of at least $15 billion in the non-deliverable forwards (NDF) market, marking a decisive return to a segment it had gradually reduced over the past year.
The interventions come as the rupee has emerged as Asia’s weakest-performing currency in 2025, weighed down by record outflows from Indian equities and concerns over potential punitive tariffs from the United States. Investors have been selling local assets at an unprecedented pace, prompting the central bank to act more assertively than in previous periods of currency volatility.
India’s central bank governor, Sanjay Malhotra, signaled the bank’s heightened vigilance last week, noting that it was monitoring the rupee closely and would take “appropriate steps” as necessary. Economists at HSBC Holdings Plc told Bloomberg that this represented a more proactive stance than the central bank’s usual statements, which typically focus on curbing short-term fluctuations in the currency.
The central bank resumed NDF interventions in August and further increased its operations in September, particularly in the one-month segment. According to Bloomberg sources, activity frequently took place before the Mumbai market opened, intensifying whenever the offshore rupee breached the 89-per-dollar threshold. Analysts say the measures have contributed to a sharp decline in the currency’s one-month volatility against the dollar, suggesting that the interventions are helping to stabilize markets amid heightened uncertainty.
Using offshore NDF contracts allows India’s central bank to influence the rupee’s exchange rate without directly selling large quantities of dollars, which can be costly and draw down official reserves. Bloomberg notes that such interventions also act as a signal to the market, demonstrating the central bank’s commitment to stabilizing the currency and boosting confidence among global investors.
Despite these efforts, the rupee continues to face significant pressure, as the underlying challenges—capital outflows, trade imbalances, and global economic uncertainty—remain. The central bank’s interventions illustrate the complex balancing act faced by emerging-market authorities trying to defend their currencies while managing domestic liquidity and foreign exchange reserves.
A spokesperson for India’s central bank declined to comment on the interventions when contacted.
