In February, the Reserve Bank of India (RBI) net bought $7.4 billion from the foreign exchange market, the highest monthly purchase since March 2025. This significant intervention came as the Indian rupee faced downward pressure, declining over 4% due to soaring crude oil prices and ongoing foreign institutional investor (FII) outflows. During the month, the RBI bought $21.4 billion while selling $13.99 billion, resulting in a net purchase. The rupee's real effective exchange rate (REER) fell to 92.72, indicating a potential decrease in the competitiveness of Indian exports. Market analysts highlighted that the RBI's buying activity was largely influenced by the maturity of previous forward contracts, requiring the central bank to take delivery in the spot market. By the end of February, the RBI's net short dollar position in the rupee forward market had risen to $77.67 billion, up from $67.78 billion at the end of January. Despite a softer dollar index, the rupee remains under pressure, which traders attribute to expectations of further rupee weakness and the RBI's forward positioning affecting capital inflows.