The Reserve Bank of India is weighing interest rate hikes, currency swaps, and fresh dollar-raising efforts to arrest a rupee that keeps hitting new lows against the greenback.

The rupee fell to an all-time low of 91.7425 against the US dollar, driven by heavy equity outflows and surging demand for bullion imports.

What the RBI is actually doing

The central bank has been quietly deploying foreign exchange swaps at scale. In January 2026, the RBI conducted over $2 billion in FX swaps to inject rupee liquidity into a banking system that was running dry.

That move followed an even larger intervention in December 2025, when the RBI announced a $5 billion USD/INR buy-sell swap auction. The goal: shore up dollar supply in the market without permanently depleting India’s foreign exchange reserves.

The December auction didn’t exactly inspire confidence on its own. After the announcement, the rupee still fell by 13 paise to trade at 89.98 against the dollar.

In January 2025, roughly a year earlier, the RBI injected approximately $3 billion worth of rupee liquidity through similar dollar-rupee swap operations.

Why the rupee keeps falling

Two forces are conspiring against the Indian currency right now.

First, foreign portfolio investors have been pulling money out of Indian equities at a meaningful clip. When global investors sell Indian stocks, they convert their rupee proceeds back into dollars, creating selling pressure on the currency.

Second, India’s appetite for gold imports has spiked. India is one of the world’s largest consumers of gold, and buying bullion on international markets requires dollars. Increased demand for gold means increased demand for dollars, which means more downward pressure on the rupee.

The bigger picture for investors

The RBI has moved from $3 billion in swaps in early 2025 to $5 billion auctions by the end of that year, plus another $2 billion in early 2026. Each round of intervention is larger than the last.