India central bank net sold $7.9 billion in September to halt rupee’s slide, bulletin shows

MUMBAI: The Indian central bank sold a net of $7.91 billion in the foreign exchange market in September, data released on Monday showed, as the Reserve Bank of India stepped up efforts to curb a slide in the currency.

The RBI said it purchased $ 2.2 billion and sold $10.11 billion, as it stepped in to support the currency which fell to its then all-time low of 88.80. In August, the central bank had sold a net of $7.7 billion.

Trade tensions between India and the United States alongside a jump in gold and silver imports exerted pressure on the currency in September.

The pressures have since lingered as a trade deal between New Delhi and Washington has remained elusive, pushing the rupee to fresh all-time lows. The currency hit a record low of 89.49 on November 21, down 4.5% year-to-date.

The RBI’s net outstanding forward and futures dollar sales stood at $59.4 billion as of end-September, marking its first rise in six months.

The central bank intervenes in the spot and forwards market to curb exchange rate volatility.

The rupee’s recent depreciation has occurred due to penal tariffs on Indian exports and a good trade deal should help relieve pressure on the country’s current account, Reserve Bank of India Governor Sanjay Malhotra said at an event last week.