The Indian rupee fell sharply against the US dollar, reaching an all-time low this week.
As a result, the Reserve Bank of India expanded forward dollar positions to nearly $100 billion.
This increase represents a rise from $67.8 billion in January and approaches February 2025’s record.
Rupee Hits Record Low
To manage the currency, the RBI focuses on offshore non-deliverable forwards, influencing rates without using reserves immediately.
Additionally, onshore buy-sell swaps, some extending over a year, relieve liquidity pressures in domestic markets.
Meanwhile, India’s foreign exchange reserves remain strong at $717 billion, giving the RBI room to act.
Over the past two years, a stronger US dollar and global capital outflows have pressured the rupee.
Furthermore, high US tariffs and geopolitical tensions added challenges to India’s emerging market economy.
To stabilise the rupee efficiently, the RBI increasingly relies on non-deliverable forwards, keeping intervention costs relatively low.
Naira Faces Market Pressure
Similarly, Nigeria struggles as the naira weakened to ₦1,362/$ after briefly appreciating to ₦1,345/$.
Tuesday’s rate marked the naira’s strongest level since February 18, 2026, reflecting short-term market optimism.
However, Nigeria’s gross external reserves fell slightly, from $50.45 billion in February to $49.86 billion in March.
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These reserves remain crucial for the Central Bank of Nigeria to defend the naira amid economic pressure.
Declining oil revenues and global market volatility continuously challenge Nigerian policymakers in currency management.
At the same time, global investors reacted to Middle East tensions, triggering mixed movements in emerging market currencies.
Central Banks Act Strategically
Overall, India and Nigeria show how central banks balance reserves and market interventions to stabilise currencies.
Strong reserves and strategic actions provide tools, yet global shocks still threaten economic and currency stability.
Consequently, these developments highlight how emerging economies must act decisively to navigate international financial pressures.
