RBI pumped in $2.5 billion in April to cut rupee volatility

The Reserve Bank of India (RBI) sold greenbacks worth $2.483 billion in April after it bought $996 million from the spot market in March.

In April, the apex bank purchased $5.536 billion and sold $8.019 billion in the spot market, according to the RBI’s June bulletin. This was against a net purchase of $566 million in April 2017.

India’s foreign exchange reserves stood at $412.23 billion in June 1. 

In March this year, RBI had bought $3.328 billion and sold $2.332 billion in the spot market. RBI’s intervention in the foreign exchange market is to curb volatility in the Indian currency. The rupee has depreciated more than 6.5% this year and is one of the worst performing currencies in Asia.

However, real effective exchange rate (REER) or rupee’s relative performance vis-a-vis six major currency partners fell to 123.34 in May from 124.08 in April. In the same period in the previous year, the REER (in a six currency basket) was 131.69, indicating the rupee could be near about its fair value.

In April 2017, the RBI had bought $1.751 billion and sold $1.185 billion in the spot market. In FY18, the RBI registered a net purchase of $33.689 billion from the spot market. It had bought $52.068 billion from the spot market, while selling $18,379 billion.