RBI net sold forex worth $3.66 billion in June in spot market to keep rupee stable

Mumbai: The Reserve Bank of India (RBI) sold $3.66 billion in the spot foreign exchange market in June, according to the central bank’s monthly bulletin.

The central bank reported purchasing $1.16 billion and selling $4.83 billion during June. Before this, the bank had bought $1.76 billion from the spot market in May.

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In June, the domestic currency faced pressure from uncertainty over US tariffs and foreign investors pulling money out of India. The RBI took the path of selling dollars to prevent the rupee from falling too sharply in value.

Meanwhile, India’s external sector showed resilience, with only a modest current account deficit and forex reserves sufficient to cover 11 months of imports.

The resilience of India’s external sector has been a key contributor to its stable macroeconomic environment amid a global trade environment shaped by tariff adjustments and increased uncertainty, according to the Finance Ministry’s ‘Monthly Economic Review’.

The rupee was one of the least volatile currencies in July among major emerging market and developing economies (EMDEs) despite marginal depreciation. In August, the Indian currency registered some gains against the US dollar following the announcement of S&P’s upgrade of India’s sovereign rating, the bulletin added.

About the state of the Indian economy, the RBI said that industrial activity remained subdued in July, while the manufacturing sector expanded along with the services sector, sustaining the growth momentum.

Headline inflation fell for the ninth consecutive month in July. Financial conditions remained congenial and supportive of domestic economic activity. India’s sovereign rating upgrade by S&P bodes well for capital inflows and sovereign yields going forward, the report noted.

India’s Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) increased by $41 million, while the country’s reserve position with the IMF rose by $15 million to $4.754 billion. These figures underscore India’s growing financial buffer and its ability to withstand external shocks.

–IANS