In January, the RBI had net purchased $1.9 billion in the spot market, the central bank’s April 2023 Bulletin showed. In February, the RBI did not sell US dollars in the currency market.
The RBI’s net dollar purchases in February are the highest since June 2021, when the RBI had net bought $18.6 billion in the foreign exchange market. The central bank’s stated position is that it intervenes in the currency market through sales or purchases of the US dollar to curb excessive volatility in the rupee’s exchange rate.
The central bank has said recently, however, that it aims to build up its foreign exchange reserves amid a global financial market volatility.
The RBI’s headline foreign exchange reserves touched an all-time high of $648.56 billion as on April 5. The central bank’s heavy dollar purchases in February came amid robust foreign inflows into Indian capital markets that month.
