Reserve Bank Of India / RBI used all its might to revive the rupee, spent Rs 44,000 crore

Reserve Bank Of India: The Reserve Bank of India (RBI) has sold at least $5 billion of US currency this month to handle the falling value of the rupee. According to a Bloomberg report, sources familiar with the transaction said that this step has been taken to save the rupee from its all-time low. However, there has been no official statement from the RBI on this matter yet. If this trend continues, this could be the biggest month of RBI's net dollar sales since January.

Pressure and global impact on rupee

Last week, the rupee slipped to 87.89 per dollar, only slightly above its historical low. The main reason for this decline was the decision of US President Donald Trump on August 6 to double the tariff on Indian goods to 50% in response to Russian oil purchases. A weak rupee can increase imported inflation, putting further pressure on India's already weak economic recovery.

The intervention is seen as a departure from the central bank's earlier dovish stance under RBI Governor Sanjay Malhotra, who took charge in December. According to sources, on several occasions last week, the RBI was seen intervening in the offshore market ahead of the domestic currency trade opening at 9 am Mumbai time.

Rupee among Asia's weakest currencies

The rupee has fallen more than 2% this year, making it one of Asia's worst-performing currencies. Nearly half of this decline was recorded in the last two weeks, when the Trump administration repeatedly raised tariffs. The use of so-called non-deliverable forwards (NDFs) helps the RBI control the direction of the rupee without selling large amounts of dollars. Last year too, the central bank relied heavily on this strategy.

Forex reserves decline

According to the latest RBI data, foreign exchange reserves have fallen by $9.3 billion, the biggest drop since November. The reserves reached $689 billion in the week ended August 1. Part of this reduction reflects changes in the valuation of global currencies, not just RBI's dollar sales.

Signs of improvement in rupee

The rupee rose by eight paise to 87.50 per dollar in early trade on Monday. Forex traders say that this slight improvement in the rupee was seen due to weakness in the US dollar and the wait for signals from the upcoming talks between Russia and the US. The rupee opened at 87.56 in the interbank foreign currency exchange market and reached the level of 87.50, which is better than the previous close price of 87.58.

Other market activities

Brent crude prices fell 0.48% to $ 66.27 per barrel in futures trading. The dollar index, which reflects the position of the US dollar against six major currencies, was down 0.11% at 98.07. According to stock market data, foreign institutional investors (FIIs) bought shares worth Rs 1,932.81 crore on Friday, indicating some positive activity in the market.