The Reserve Bank of India (RBI) sold $7.7 billion in August to control the ongoing exchange rate fluctuations and arrest the rupee's fall against the US currency. According to the US dollar sales/purchases data published in the RBI's latest bulletin, the Reserve Bank of India's net US dollar sales in August stood at $7.69 billion, almost three times that of the previous month. According to the data, the central bank did not buy US dollars in July and August.
RBI intervenes only when there is extreme volatility
The RBI's stated stance is that it does not target any level or range for the rupee-dollar exchange rate, but only intervenes in the foreign exchange market when there is extreme volatility. The rupee fell sharply against the dollar in August. Subsequently, the Indian rupee declined against the US dollar in September amid rising trade tensions, growing global uncertainties, and continued foreign portfolio investment outflows.
The rupee closed higher on Monday
On Monday, the rupee rose nine paise to close at 87.93 (provisional) against the US dollar, driven by buying by foreign investors and a decline in crude oil prices. According to forex traders, positive sentiment in the domestic stock markets further supported the local currency. The rupee opened at 87.94 against the US dollar in the interbank foreign exchange market. During the day, it touched a high of 87.74 and a low of 87.94.
The rupee closed at 88.02 against the dollar on Friday
At the close of trading, the rupee closed at 87.93 against the US dollar, a gain of 9 paise from its previous close. The rupee had closed at 88.02 against the US dollar on Friday. Meanwhile, the dollar index, which gauges the dollar's position against six major currencies, rose 0.1 per cent to 98.53.
