RBI Sells $7.91 Billion to Support Falling Rupee Amid Rising Trade Tensions

In September, the Reserve Bank of India (RBI) sold a net $7.91 billion in the foreign exchange market, data released on Monday showed, as it stepped up efforts to stabilise the rupee amid sharp depreciation. The central bank purchased $2.2 billion and sold $10.11 billion during the month to support the currency, which had fallen to a then-record low of 88.80. In August, the RBI had sold a net $7.7 billion.

Trade Pressures Weigh on Currency

The rupee came under significant pressure due to rising trade tensions between India and the United States, along with a surge in gold and silver imports. These challenges have persisted as a trade agreement between New Delhi and Washington remains elusive, pushing the rupee to new all-time lows. On November 21, the currency hit a historic low of 89.49, down 4.5% year-to-date.

Forward and Futures Dollar Sales Rise

The RBI’s net outstanding forward and futures dollar sales reached $59.4 billion by the end of September, marking the first increase in six months. The central bank regularly intervenes in both spot and forward markets to manage exchange rate volatility.

Also Read:Indian Bonds Rise on Hints of Policy Easing from RBI

RBI Governor Comments on Rupee Slide

Reserve Bank of India Governor Sanjay Malhotra said last week that the rupee’s recent decline has been fueled by punitive tariffs on Indian exports. He noted that a comprehensive trade deal with the United States could help relieve pressure on India’s current account.

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