Coordinated RBI Market Intervention
The Reserve Bank of India stepped up its simultaneous intervention in both the foreign exchange market and the government securities market on March 10, 2026, responding to sustained oil prices above $100/barrel that have put the rupee under severe pressure while threatening to spike government borrowing costs through imported inflation and fiscal pressure.
Forex Intervention Details
The RBI is estimated to have sold $2.1–$2.5 billion in the spot forex market on March 10 alone, according to dealers at three primary dealer banks. For the period since February 28, the estimated total RBI forex intervention is $8–$10 billion. India's forex reserves remain robust at $623 billion, providing coverage of approximately 10 months of imports — well above the IMF's "adequacy" benchmark of 3 months.
G-Sec Intervention
Simultaneously, the RBI's OMO purchase of ₹50,000 crore injected rupee liquidity that had been withdrawn by forex intervention, effectively sterilising the currency operations. This is a textbook "sterilised intervention" approach — preventing the forex sales from tightening domestic liquidity conditions and pushing up short-term interest rates.
Rate Cut Prospects
The coordinated intervention signals that the RBI is managing against two simultaneous pressures: keeping the rupee from a disorderly collapse (which would worsen inflation) while keeping liquidity conditions easy enough to enable the two 25 bps rate cuts the MPC signalled in its February policy statement. Markets now price in a May 2026 rate cut as having a 62% probability, down from 85% pre-conflict, reflecting higher near-term inflation uncertainty.
