RBI sold net 384 million dollars in Jan 2023 in spot forex market

The Reserve Bank of India (RBI) sold 384 million dollars in the spot forex market during the month of January 2023. This is lower compared to the net sales of $771 million in January last year.

In its bulletin of March 2023, RBI's data showed that it purchased $12.90 billion in January 2023, while selling $13.29 billion. Hence, the total dollar sales were at $384 million in the month.

To tame rupee depreciation this fiscal year, RBI has been intervening in the forex market via both spot and forward positions.

In December 2022, RBI made a purchase of $3.842 billion in the spot market.

Meanwhile, the outstanding net forward purchase at the end of the month stood at $21.729 billion. This is compared to the outstanding net forward purchase of $49.877 billion in January 2022. In the preceding month, the net forward purchase stood at $10.968 billion.

In January this year, the rupee depreciated by around 1% against the US dollar. It performed in the range of 80.88 to 82.94 during this month.

Currently, India's forex reserves have hit a three months low at $560 billion in the week that ended on March 10, 2023. The total reserves were at an all-time high of $645 billion in October 2021.

On Tuesday, the rupee depreciated against the US dollar on the back of a steady greenback, a spike in crude oil prices, and stubborn foreign funds outflow despite positive domestic equities. However, the weakening of the rupee was limited. The local unit closed at 82.6550 per dollar against the previous print of 82.6350 per dollar.

Anindya Banerjee, VP - Of currency Derivatives & Interest Rate Derivatives at Kotak Securities said, "USD INR spot closed 2 paise higher at 82.66. It was a day lackluster trading. The next major trigger remains the Fed meeting tomorrow night. We expect a broad range of 82.00 and 83.00 for the rest of the week.”