RBI Dollar Purchases In March At Six-Month High
Net purchases of dollars by the RBI jumped to $3.54 billion in March.
The Reserve Bank of India’s (RBI) net purchase of dollars hit a six month high in March, shows data released by the central bank as part of its monthly bulletin. The RBI stepped up its intervention in the foreign exchange markets as strong inflows pushed up the currency to levels which some perceived as overvalued.
Data released on Tuesday showed that net purchases of dollars by the central bank jumped to $3.54 billion in March. This is the highest net purchase since September when net purchases stood at $4.64 billion.
A break-up of the data shows that the RBI bought over a total of $ 5 billion in foreign exchange in March, while sales added up to just under $1.5 billion. The data on the central bank’s forex operations are released with a two-month lag and is reported in Dollars.
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The central bank has been faced with a surge in inflows into equity and debt markets over the past few months. It has sucked out a large part of these flows through interventions in the market, which, in turn, has led to a surge in foreign exchange reserves. India’s forex reserves hit a record high of $372.73 billion as of April 28, according to RBI data released on Friday.
Despite this, the Indian currency has been one of the best performing in the Asian region and has gained more than 5 percent since the start of the year. On Tuesday, the Indian currency closed at 64.63 against the dollar, down 0.50 percent compared to its previous close. The Rupee may weaken back to levels close to 65 against the Dollar, Mahendra Jajoo, head fixed income at Mirae Asset Global Investment (India) told BloombergQuint.