RBI net sold $11.88 billion in October amid heightened volatility in Indian rupee

Reserve Bank of India

Amid heightened volatility in the Indian rupee, the Reserve Bank of India (RBI) net sold $11.88 billion in October, as compared to $7.910 billion, according to the central bank's monthly bulletin.

The data showed that the central bank gross purchased $17.685 billion, and sold $29.562 billion.

In October, the Indian rupee remained in the range of 87-88 against the US dollar. After this, the local currency started depreciating sharply amid outflows by the foreign portfolio investors (FPI) from Indian equities.

The central bank has been defending the local currency since it touched and crossed the 91-mark by intervening in the spot market.

The central bank’s action came at a time when the rupee had been hitting consecutive record lows and, earlier this week. Such relentless depreciation triggered concerns over imported inflation and broader market sentiment, prompting the RBI to lean heavily on its foreign exchange reserves to stabilise the currency.

The currency has been under pressure in the last few months, especially due to the delay in the trade deal, which led to the currency hitting fresh record lows. On the other hand, the limited intervention by the RBI was also adding to the pain.

In the last three months, the rupee has been trading in the range of 88.20-91.03 against the US dollar.