RBI Intervenes in Forex Market to Arrest Rupee Slide Post-Budget; Currency Recovers to 91.60 Per Dollar

The **RBI intervened in foreign exchange markets on February 2 2026** to arrest the rupee slide after the Union Budget presentation. The rupee threatened to breach its historic low of **91.9875 against the US dollar** amid mixed market reactions to the Budget fiscal deficit target of **4.3% of GDP**. The RBI sold dollars to stabilize the currency.

After the **RBI dollar-selling intervention**, the rupee **recovered to around ₹91.60 per US dollar** from near its historic low of 91.9875. The intervention reassured markets about the central bank's willingness and capacity to defend currency stability.

As of February 2026, India's **forex reserves stood at approximately USD 625 billion**, giving the RBI adequate ammunition to intervene in currency markets. This large reserve buffer allowed the central bank to sell dollars to stabilize the rupee without depleting reserves significantly.

Market reactions to the **fiscal deficit target of 4.3% of GDP** in Budget 2026-27 were **mixed**: some investors welcomed the continued fiscal consolidation path (down from 4.4% in FY26 RE), while others were cautious about higher absolute borrowings of ₹17.2 lakh crore. This uncertainty contributed to the **rupee initial weakness** post-Budget.

The RBI defends the rupee primarily through **selling US dollars from its forex reserves** in the currency market, increasing dollar supply and reducing demand pressure on the rupee. With **USD 625 billion in reserves**, the RBI has significant capacity for sustained forex intervention, aiming to prevent **excessive volatility** rather than target a specific exchange rate level.