The Reserve Bank of India’s operations in Rupee’s defence have resulted in net sales of USD 33.42 billion till September 2022, Union finance minister Nirmala Sitharaman informed Lok Sabha on Monday.
Sitharaman responded to a question about whether the RBI has been using foreign exchange reserves to stem the fall in the Indian currency. “The Reserve Bank of India (RBI) closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band. During the financial year, the RBI’s operations have resulted in net sales of US$33.42 billion till September 2022 (settlement basis),” Sitharaman said in her written reply.
Typically, the RBI from time to time intervenes in the markets through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.
As global spillovers from geopolitical tensions and aggressive monetary policy tightening across the world intensified alongside a surge in crude oil prices, the US Dollar strengthened by 7.8 per cent in the financial year (till November 30, 2022).
The Rupee depreciated by 6.9 per cent in the current financial year (till November 30, 2022). It has performed better than most Asian peer currencies, including the Chinese Renminbi (10.6 per cent), Indonesian Rupiah (8.7 per cent), Philippine Peso (8.5 per cent), South Korean Won (8.1 per cent), Taiwanese Dollar (7.3 per cent) during the financial year, Sitharaman said in her written reply to Lok Sabha.
The RBI had announced various measures in the recent period to diversify and expand the sources of forex funding to mitigate exchange rate volatility and dampen global spillovers.
Of them, the major one is that the RBI has put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in Indian currency in mid-July, 2022, in order to promote the growth of exports from India and to support the increasing interest of the global trading community in the Indian currency. (ANI)
