What question did this study set out to answer?

The aim is to examine the changing role of the RBI in managing foreign exchange and its impact on the economy.

April 8, 2026

Role of RBI in Foreign Exchange Management

Key Points

The aim is to examine the changing role of the RBI in managing foreign exchange and its impact on the economy.
Analyzed historical changes in RBI's foreign exchange policies.
Reviewed RBI's interventions during financial crises and geopolitical conflicts.
Outlined market trends and initiatives since the 1990s.
RBI transitioned from strict control to a more liberalized foreign exchange system.
Increased involvement in spot, forward, and futures markets both onshore and offshore.
Recent initiatives aim to promote the internationalization of the Indian rupee.

Abstract

The role of the Reserve Bank of India (RBI) in foreign exchange management has changed since independence. From strict control of foreign exchange resources before the balance of payments crisis of 1991, it moved to a more liberalized exchange rate management system, with a focus on current and capital account convertibility. It operates in spots, forwards and futures markets, both onshore and offshore, generally through agency banks. The intervention becomes critical during turbulent periods, from the global financial crisis to the Russia–Ukraine conflict. This article outlines recent market trends and enumerates a series of initiatives taken by the RBI since the early 1990s for the development of the foreign exchange market. The article concludes with a discussion on some recent measures for the internationalization of the rupee. JEL Classification: G01, G15, G18

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