RBI builds $31-bn forwards position as dollar tide rises

Foreign investors brought $31.33 billion into India in 2017, of which $22.6 billion has moved into debt

The Reserve Bank of India (RBI) has built up a $31-billion position in rupee-dollar forwards as a continuous foreign fund inflow has necessitated active intervention by the central bank in the spot market.

Forwards contracts are designed to buy foreign currencies at pre-agreed prices. A buyer has to pay a fee, the forward premium, for the right to buy at that price.

Economists and currency dealers said the RBI action could also be a form of insurance against an outflow of dollars as central banks around the world had begun normalising their easy money policies. In August and September, the