India's central bank intervened in the foreign exchange market in September, after following a hands-off approach for nine straight months, as the unit fell to its lowest level in more than two years, its monthly bulletin showed on Friday. The rupee had moved in a wide band of 45.79 per dollar to 49.90 in September. It had also dropped 8.8 percent between July and September, its worst quarterly fall in three years.
The Reserve Bank of India (RBI) has always maintained that it does not target any specific exchange rate on the rupee and only intervenes to prevent excessive volatility in the foreign exchange market. Reuters had reported in mid-September that the central bank likely sold dollars to prevent the rupee from falling sharply. RBI sold $845 million in September, while it did not buy any dollars, in its first intervention since November 2010, when it had bought $1.37 billion and sold $500 million, the bulletin showed.
On a net basis, November 2010 was the RBI's biggest monthly intervention since June 2009, when it had bought $1.04 billion. In 2010, the central bank bought a net $1.85 billion, compared with net sales of $5.8 billion in 2009 when it intervened to prevent the rupee from depreciating sharply. On Friday, the partially convertible rupee closed at 50.1150/1250, 0.1 percent stronger than its Wednesday close of 50.1750/1850. Earlier in the day, it had dropped to 50.4200 against the dollar, a level last seen on April 28, 2009.
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