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Currency Market: The Reserve Bank of India ( RBI ) has released its monthly bulletin. The latest data in it showed that the RBI spent $ 44.5 billion (Rs 3.80 lakh crore) in October to prevent the rupee from weakening. The RBI did this through intervention in the futures and spot currency markets. Spot sales were $ 9.3 billion, forward sales were the highest at $ 35.2 billion. However, the rupee still crossed the 85-dollar mark in December.
What was the benefit of RBI's intervention
The central bank's intervention in October ensured that the rupee did not weaken too much against the dollar, despite the massive dollar outflows that have been seen in equity markets, which have fallen by 11% from the record high of September 27. The central bank's measures in the currency market also mitigated the impact on liquidity.
Foreign portfolio investors withdrew $10.9 billion
It is worth noting that in October, foreign portfolio investors withdrew $10.9 billion. But during the month, the rupee fell by only 30 paise against the US dollar to close at Rs 84.06. However, the US dollar strengthened by 3.2% (month-on-month) in October, while the MSCI currency index for emerging market economies declined by 1.6% in October.
The stability of the rupee was possible only due to massive dollar sales by the central bank.
$2.4 billion withdrawn in November
FPIs pulled out $2.4 billion in November. Currency market analysts said the RBI continued to sell a large amount of dollars in November as well, ET reported. Foreign portfolio investors (FPIs) remained net sellers in the Indian financial markets in November 2024, as a rising US dollar and yields weighed on sentiment for risk assets across the globe.
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