India’s foreign exchange reserves fell to $709.76 billion on 9 March, down from $716.81 billion in the previous reporting period.
The figures show a drop of $7.05 billion over the period. The update reports the total level of reserves in US dollars.
We’ve seen a notable drop in India’s foreign exchange reserves, down by over $7 billion in the week ending March 9th. This is a clear signal that the central bank is actively selling dollars in the market. The likely goal is to prevent the rupee from weakening past a specific, but unstated, level.
This intervention suggests we should expect more choppiness in the USD/INR pair in the coming weeks. Implied volatility for rupee options has already ticked up by 5% this month, making strategies that benefit from price swings more attractive. Traders should consider buying call options on the USD/INR as a way to position for potential further weakness in the rupee, should the central bank’s defense waver.
The pressure on the rupee is being driven by real market forces; we are tracking a net outflow of nearly $2 billion from foreign portfolio investors in the first half of March. This, combined with crude oil prices holding firmly above $90 a barrel, creates a strong headwind for the currency. The central bank is leaning against these fundamental pressures, not just light speculation.
We’ve seen this playbook before, particularly when we look back at the situation in 2022 from our perspective in 2025. The central bank defended the currency then, but sustained global pressure and a strong dollar eventually led to a depreciation. While the reserve buffer is much larger now than it was back then, it shows that such defenses can be costly and are not always a permanent fix.
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