In fiscal year 2023–24, the Reserve Bank of India (RBI) acquired $41.27 billion, marking the largest net dollar purchase in the previous three years. This amounts to the most that has been purchased since the 2020–21 fiscal year (FY21). On a net basis, the RBI had purchased $68.3 billion in FY21.
The largest monthly net purchase since June 2021 was made by the central bank in March alone, when it purchased $13.2 billion. The RBI had net purchased $18.6 billion in dollars as of June 2021. Notably, the decision was made following a difficult 2022 in which the RBI net sold $25.5 billion in dollars. Throughout the fiscal year, the Indian rupee lost 7.5% of its value about the US dollar. Nonetheless, the Indian rupee lost 1.5% of its value in FY24. The rupee has increased by 0.1% thus far in the current fiscal year.
To control exchange rate volatility, the central bank took in a sizable amount of the active inflows that resulted from India’s inclusion in the JP Morgan bond index.
They purchased a significant quantity of dollars due to the robust influx of foreign capital into the nation. To maintain the rupee’s stability and reduce volatility, the RBI has kind of held this foreign exchange market intervention strategy.
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