RBI net bought $1.76 bn in May; forward short dollar position at $65.21 bn

The Reserve Bank of India net bought $1.76 billion in May, after a net sell of $1.6 billion in April. The central bank bought $9.12 billion, while it sold $7.36 billion of foreign currency in May. The rupee had depreciated by 1.3 per cent in May. 

Before May, the RBI was a net buyer of the greenback only in March, while it remained a net seller in January, February, and April.

 

The outstanding net short dollar position in the rupee forward market fell further to $65.21 billion by the end of May, against $72.57 billion at the end of April. 

“Around $7 billion short positions matured in May which were not rolled over,” said a dealer at a state-owned bank. “In spot, the dollar index had declined and the RBI had accumulated dollars,” he added.   

The dollar index fell by 0.14 per cent to 99.33 in May. It measures the strength of the greenback against a basket of six major currencies. 

Of the $65 billion net short dollar position, $4.8 billion was in one-month contracts, $10.2 billion in 1-3 month tenures, $30 billion position is set to mature between three month and a year, and the remaining $20 billion was in more than a year contract. 

As of June 2025, the Real Effective Exchange Rate (REER) of the Indian Rupee fell to 100.36, down from 101.12 in May. In May, REER had increased after five consecutive months of moderation since December 2024. 

The REER adjusts the Nominal Effective Exchange Rate to account for inflation differentials between India and its major trading partners. A REER value above 100 indicates an appreciation of the rupee relative to the base year, potentially making Indian exports less competitive.