BIZ-RBI-DOLLAR

The Reserve Bank remained a net

seller of dollars in November 2018, as it sold USD 644 million

of the greenback on a net basis in the spot market, according

to the latest data from the Central bank.

As against this, in November 2017, the Central bank

had purchased USD 2.570 billion from the spot market and sold

USD 1.706 billion, while in the reporting month, the monetary

authority bought USD 3.127 billion from the spot market, and

sold USD 3.771 billion, show the data.

The rupee had a better run in the past fiscal, while

it was one of the worst among its emerging market peers this

fiscal year, which explains the reasons for the RBI

intervention in the forex market.

In October 2018 also, the RBI was a net seller of

dollars, after it purchased USD 945 million and sold USD 8.149

billion of the US currency in the spot market.

Normally, the central bank sells dollars to contain

rupee volatility as it does not officially set a price level

for the rupee, which is only partly fully floating as the

country does not allow full capital account convertibility.

In first five months of this fiscal year, the central

bank has sold a whopping USD 34 billion as the rupee was on a

roller-coaster, plumbing a low of 74 to the American unit.

Between April and November 2108, the central bank has

net sold USD 26.51 billion of dollars in the spot market. This

compares with a net purchase of USD 18.017 billion made in the

same period in 2017.

The RBI has, so far, remained a net-seller of the US

currency in the current fiscal.

In FY18, the apex bank had net purchased USD 33.689

billion from the spot market, taking its total dollar purchase

to USD 52.068 billion, while selling USD 18.379 billion, this

helped the country for the first time scale a life-time peak

of USD 426.028 billion for the week to April 13, 2018 in forex

reserves. But since then, the forex kitty has been fluctuating

and mostly sliding.

In FY17, the RBI had bought USD 12.351 billion on a

net basis.

In the forward dollar market, the outstanding net

forward sales at the end of November 2018 was USD 1.924

billion, compared to sale of USD 2.888 billion in October,

show the RBI data.

In the week to January 4, 2109, the forex kitty

swelled by USD 2.68 billion to a tad over USD 396 billion,

making the week the best in terms of accretion in the past 12

months period.

Overall reserves had increased by USD 116.4 million to

USD 393.404 billion in the previous reporting week. In the

reporting week, foreign currency assets, a major component of

overall reserves,rose USD 2.215 billion to USD 370.292

billion.

The value of the gold reserves increased by USD 465.5

million to USD 21.689 billion in the reporting week, the apex

bank said. It can be noted that the RBI has been buying

bullion after almost a decade. During its fiscal year ending

June 2018, the RBI had added 8.46 metric tonnes of gold. The

central bank now holds total 566.23 tonne of the yellow metal.

The purchase was made to diversify foreign currency

assets, the RBI had said in its annual report.