Trying to beat 1991?

"India's foreign exchange reserves witnessed a massive surge of $14.167 billion to reach $701.36 billion in the week ended January 16, the Reserve Bank of India (RBI) data showed." Reserves increased by $392 million the previous week. Zee. "RBI...announced a series of liquidity measures that will inject more than $23 billion (around Rs 2 trillion) into the banking system, following a review of current liquidity and financial conditions." ET. On Friday (23 Jan), "The rupee slipped close to the 92 mark before ending the day at 91.94 against the dollar, down 24 paise." The RBI sold dollars to support the rupee, pulling rupees out of the banking system. "This tightening of liquidity tends to push up short-term interest rates," making borrowing more expensive. So, the RBI conducted a dollar swap to solve the problem. "Under this arrangement, banks sell dollars to the central bank and receive rupees, with an agreement to reverse the transaction after three years." This increases liquidity and reduces yields on bonds, while the RBI sells dollars in the spot market to push the rupee up. TOI. In effect, the RBI is short-selling borrowed dollars. The rupee lost 5% against the US dollar in 2025. This will raise the cost of durable goods like air-conditioners and washing machines etc. where imported components comprise 20-60% of material costs. Hence the core inflation, which ignores volatile food and fuel prices (Investopedia), "has stayed above 4% for 11 consecutive months and hit 4.6% in December." As prices rise, consumers may cut or postpone purchase which may impact earnings and profits of companies, wrote Rumki Majumdar & Swapnil Kothari. "India typically runs a current account deficit (exports minus imports) and a surplus on the capital account (it receives more capital than it sends out)." Mint. Foreign Direct Investment (FDI) and remittances by non-resident Indians (NRI) contribute to the capital account. "The overseas Indian community transferred $135.46 billion to India during the previous fiscal year (2024-25), setting a new record." TOI. Although, inward FDI has held steady, repatriation of FDI by foreign investors has "jumped from around $18 billion pre-pandemic to $44 billion and $51 billion in 2023-24 and 2024-25 respectively." Also, outward FDI by Indians has more than doubled from $13 billion in 2019-20 to $28 billion in 2024-25, most of it going to tax havens like Singapore, Mauritius and the UAE. Rich Indians are protecting their wealth against high taxes and the depreciation of the rupee. To add to the outflow, Indian exports to China increased by a negligible $5.5 billion to $19.75 billion during January-December 2025, while imports from China soared 12.8% to $135.87 billion, so that the trade deficit with China jumped to a record $116.12 billion. TOI. While, fertilizer imports "are expected to surge 76% from a year earlier to a record $18 billion." ET. While dollar inflows fall, outflows and deficits rise, the rupee will continue to fall. The RBI can print the rupee but it cannot create dollars. The Budget could expect a dividend up to, or over, Rs 3 trillion, since the RBI paid Rs 2.56 trillion last year. MC. Will the RBI run out of reserves? And if so, what happens to the rupee? The rupee was devalued by 20% in July 1991. wikipedia. The present government may want to beat that. 30% or 50%?