RBI reverses course, sells $6.49 bn in spot forex market in August, shows bulletin

The Reserve Bank of India (RBI) sold a net $6.49 billion in the spot foreign exchange market in August, according to data from its latest monthly bulletin. This marks a notable shift from July, when the central bank made net purchases of $6.93 billion.

In August, the RBI purchased $16.14 billion in the spot forex market but sold $22.64 billion, reflecting the bank’s efforts to contain fluctuations in the value of the Indian rupee.

Despite interventions, the rupee weakened by 0.2% over the month, registering its second consecutive monthly decline.  This performance stands in contrast to most Asian currencies, which gained between 2% and 6% during the same period, Reuters reported.

The RBI actively intervenes in both the spot and forward forex markets to curb excessive volatility and stabilise the rupee’s value.

According to the data, the RBI’s net outstanding forward dollar sales surged to $18.98 billion at the end of August, compared with $9.1 billion at the close of July.

The currency settled at 84.0725 to the dollar on Monday.

(With agency inputs)