RBI cuts forex intervention as West Asia war starts hurting

After having aggressively defended the rupee earlier this month, the Reserve Bank of India (RBI) is now easing back from intervention as the escalating West Asia conflict roils global markets and constrains its policy options, four economists said.

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RBI's recent pullback in intervention reflects a strategic recalibration rather than a loss of control on the currency, they said, adding that external shocks—from a prolonged war to surging oil prices—are dominating currency movements.

“RBI has reduced intervention in the last couple of sessions,” Dhiraj Nim, economist and foreign exchange strategist at ANZ said, adding that it’s a logical step for the central bank given oil prices remain elevated and are forcing a reassessment of India’s external balances, growth, and inflation outlook.