The Reserve Bank of India (RBI) nearly bought a net $13.2 billion in the spot foreign exchange market in March, data released in its bulletin for May showed. The central bank said it purchased $14.8 billion and sold $1.6 billion during the month. In February, it had bought a net $8.56 billion in the spot market.
The rupee depreciated by 0.49 paise to 83.40 in March. Simultaneously, India’s foreign exchange reserves rose by $20 billion.
The RBI’s net outstanding forward sales was $541 million as of March-end, as against net purchases of $9.7 billion at the end of February, data showed. Total reserves stood at $645.6 billion as on March 29.
The central bank intervenes in the spot and forwards market to curb exchange rate volatility. The rupee closed at 83.31 on Tuesday.
“The rupee traded positively, gaining 0.06rs to close at 83.31. This strength is attributed to predictions of the current government winning the general election, leading to increased stability. Additionally, domestic institutional investors have been actively buying into capital markets,” Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities said.
“Soft crude prices and a stable dollar index also supported the rupee. The expected range for the rupee in the upcoming sessions is between 83.00 and 83.50,” he said.
