RBI's net dollar buying drops in May

The Reserve Bank of India's (RBI) net dollar-buying declined in May compared to the previous month as the central bank continued its dollar purchases strategy more in the forwards market.

 

On a net basis, the central bank bought dollars worth $1.79 billion in May as against $5.87 billion in April. In May, the central bank bought dollars worth $7.98 billion from the market and sold dollars worth $6.19 billion, according to RBI data.

 

"RBI's dollar purchases were more from the forwards market so that the purchases do not lead to more liquidity in the market. Due to that the net purchases in May declined," said a senior treasury official of a private bank.

 

RBI's net dollar purchases for 2013-14 stood at $8.99 billion. The central bank bought dollars worth $52.39 billion while sold $43.40 billion in 2013-14.

 

Meanwhile, the outstanding non-resident Indian (NRI) deposits in May stood at $107.42 billion compared with $105.07 billion the previous month. However, the pace of flows declined from $2.43 billion in April-May compared with $3.03 billion the same period the previous year.

 

The rupee ended at Rs 59.94 on Friday compared with previous close of Rs 60.21 per dollar. The rupee had opened at Rs 60.31.