The Reserve Bank of India (RBI) became a net seller of US dollars in fiscal year 2023, after being a net purchaser for three consecutive years.
Key Highlights:
The Reserve Bank of India (RBI) sold $25.52 billion in the spot foreign exchange market.
The RBI sold dollars to reduce volatility in the rupee, which has been under pressure due to the Russia-Ukraine war and interest rate hikes by the US Federal Reserve.
Why did the RBI become a net seller of US dollars?
The RBI sold the greenback to prop up the rupee, which had depreciated due to higher import bills and foreign investors pulling out money from the domestic market.
If not, the rupee would have depreciated to 84-85 levels against the US currency.