RBI Sells $8.94 Billion in Forex Market as Rupee Faces Pressure

The Reserve Bank of India (RBI) sold a net $8.94 billion in the foreign exchange market in April to support the rupee amid mounting pressure from rising oil prices and higher global bond yields. According to data released in the RBI’s monthly bulletin, the central bank purchased $16.23 billion and sold $25.17 billion during the month. The Indian currency had fallen to a record low of 96.96 against the U.S. dollar before recovering with the help of RBI intervention. The RBI’s net outstanding forward dollar sales stood at $95.30 billion at the end of April, down from $103.06 billion in March.

The RBI’s gold holdings remained unchanged at 880.52 metric tonnes in May. However, the value of these reserves declined to $112.6 billion from $120.23 billion at the end of April, mainly due to fluctuations in global gold prices. The central bank also dismissed recent media reports suggesting that it had sold a portion of its gold reserves. Meanwhile, India’s foreign exchange reserves fell to a more than one-year low of $671.6 billion, reflecting efforts to stabilize the rupee during a period of global uncertainty.

Despite challenges arising from Middle East tensions, rising crude oil prices and supply disruptions, the RBI said high-frequency indicators for April and May pointed to sustained economic momentum. The central bank maintained its growth forecast of 6.6% for the current financial year and noted that India’s external sector remains resilient, supported by strong foreign direct investment and adequate reserves. However, it warned that a weak southwest monsoon and elevated oil prices could increase inflationary pressures, with consumer inflation projected to average 5.1% during the financial year.

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