$7.8 Billion Rbi Mop-Up In 1996-97
The Reserve Bank of India (RBI) effected a net purchase of $7.8 billion in 1996-97 as part of its efforts to contain any adverse impact of the huge foreign inflows on domestic money supply levels.
As a result, foreign exchange reserves surged by $5.2 billion in 1996-97. Failure to absorb the flows could have pushed up the value of the rupee from the current level of Rs 35.70 to as high as Rs 33, says an analyst.
In fact, the RBI had followed up on this step by initiating repos (sale and repurchase of government securities) and open market operations by November last year as additional measures to ensure that money supply targets stayed on course. The measures were stepped up in the last quarter of 1996-97. According to the RBI, the daily average repos outstanding during January-March 1997 amounted to Rs 2,139 crore. The open market operations