The Reserve Bank of India (RBI) sold $10.36 billion worth of foreign currency on a net basis in September to shore up the rupee - more than twice what it did in August.
Data released by the central bank on November 18 showed sales in September were 144 percent higher compared to August, which had seen a sharp pull-back in intervention by the RBI in the foreign exchange market.
In July, the RBI had sold a record $38.77 billion in gross terms as the Indian rupee breached the 80-per-dollar mark for the first time on July 19.
The latest data comes after RBI Governor Shaktikanta Das said over the weekend that the foreign exchange reserves were meant to be used in times of need and were not "showpieces".
"We didn't pick up reserves just to keep it as a showpiece in the Reserve Bank of India," Das said in the Capital on November 12.
The RBI's foreign exchange reserves have fallen sharply over the last year. As on November 11, the reserves stood at $544.72 billion, down $95 billion compared to the same time last year.
A surge in global commodity prices due to the Russia-Ukraine war and the spillover from the resultant synchronised tightening of monetary policy by the world's major central banks to bring down multi-decade-high inflation has exerted massive pressure on most currencies, including the Indian rupee.
In September, the RBI's gross foreign currency sales amounted to $33.63 billion, 45 percent more than what it sold in August. Foreign currency purchases also increased, but not at the same rate, rising 23 percent to $23.27 billion.
Despite the RBI's efforts, the rupee weakened by more than 2.4 percent against the US dollar in September. It fell further in October as it broke past the 83-per-dollar mark on October 19.
The weakness of the Indian currency was reflected in other data released by the RBI today.
When compared to a basket of 40 currencies on a trade-weighted basis, the rupee's real effective exchange rate fell to 103.60 in October from 104.69 in September.
A real effective exchange rate of more than 100 indicates the currency is overvalued.
The Indian currency has gained significant ground in the last few trading sessions after data released on November 10 showed US prices rose 7.7 percent in October, down from an 8.2 percent increase in September. This is the weakest inflation print for the US since January and boosted hopes of the US Federal Reserve easing up on its rate hikes in the coming months.
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