RBI net short dollar position dips to $72.5 bn in April as rupee gains

RBI's net short dollar position in rupee forwards narrowed to $72.5 billion in April while REER rose for the first time in six months as the rupee appreciated

The Reserve Bank of India’s outstanding net short dollar position in the rupee forward market fell further to $72.5 billion by the end of April, down from $84.3 billion at the end of March, according to the central bank’s monthly bulletin.

 

Of the $72.5 billion net short dollar position, $7.3 billion was in one-month contracts, $7 billion in one–three-month tenures, $37.7 billion is set to mature between three months and a year, and the remaining $20 billion was in contracts of over one year.

 

In the spot market, the RBI net sold $1.6 billion in April, following a net purchase of $14.3 billion in March. The central bank bought $10.1 billion and sold $11.7 billion of foreign currency in April. The rupee appreciated by 1.16 per cent during the month. 

 

“The rupee gained in April due to a weakening dollar, and there was also natural buying demand for the rupee. The RBI was intervening from both sides to contain volatility during the trade war situation,” said the treasury head at a private bank.

 

As of May 2025, the Real Effective Exchange Rate (REER) of the Indian rupee rose to 101.08, up from 100.78 in April. This marks the first increase after five consecutive months of moderation since December 2024. Before the decline, the REER had steadily climbed from 103.66 in January 2024 to a peak of 108.14 in November.

 

The REER adjusts the Nominal Effective Exchange Rate (NEER) 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 in global markets.