Reserve Bank of India Sells $6.1 Billion to Stabilize Rupee

The Reserve Bank of India sold a net $6.104 billion in the foreign exchange market during May to defend the Indian rupee against volatility. This intervention followed a larger net sale of $8.944 billion in April, as the central bank attempted to counteract the effects of surging crude oil prices and geopolitical tensions in West Asia.

According to the RBI's July Bulletin, the bank purchased $22.2 billion and sold $28.3 billion in May. During this period, the rupee hit a record low of 96.96 per dollar, driven by high oil costs and rising global bond yields. To stabilize the currency, the bank increased its net outstanding forward dollar sales to a record $106.66 billion by the end of May and introduced tax cuts on foreign debt investments.

Despite these pressures, the bank reported that the external sector remains steady. This stability is supported by foreign exchange reserves covering more than 10 months of goods imports and a revival in foreign investment inflows.