The Reserve Bank of India's short dollar book climbed to a record $106.7 billion in May as the central bank deployed derivatives to defend the rupee. The position swelled by $11.4 billion amid intensified offshore market interventions, according to Bloomberg's analysis of central bank data.

The rupee had been sliding toward historic lows, touching nearly 97 per dollar in late May before authorities implemented policy measures the following month. These interventions reflect India's ongoing struggle to maintain currency stability amid global dollar strength and capital outflows.

The surge in RBI's short dollar exposure signals aggressive monetary defense tactics. By selling dollars and buying rupees in forward markets, the central bank aimed to curb volatility that threatened import costs and inflation targets.

Market participants watched closely as the rupee's decline accelerated through May, testing policymakers' resolve before the June intervention package designed to attract foreign capital back into Indian markets.