Mumbai: India’s central bank is set to sell one-sixth of its forex reserves Rupee A senior source familiar with the central bank’s thinking told Reuters against sharp depreciation after a record drop in recent weeks.
The rupee has fallen more than 7% of its value in 2022 and has weakened from the psychological level of 80 per US dollar on Tuesday, but the source said if the Reserve Bank of India (RBI) had not acted, this fall would have been somewhere else. Would have been more to stop the fall.
RBI’s currency reserves have fallen by more than $60 billion from its peak of $642.450 billion in early September, partly due to a change in valuations, but largely due to dollar selling interventions.
Despite the decline, the RBI’s reserves of $580 billion remain the fifth largest in the world, giving the central bank confidence in its ability to prevent any sharp, jerky depreciation of the currency.
“They have shown that they will use the reserves of their own accord to prevent volatility in the rupee. They have the means and they have demonstrated a willingness to use it,” the source said.
“The RBI may spend another $100 billion, if needed, to protect the rupee,” the source said.
The source said that the RBI, as per its stated stance, does not seek to protect the rupee or keep it at a certain level, but will act to avoid any depreciation in the currency.
RBI did not immediately respond to a query seeking comment.
The rupee has fallen more than 7% of its value in 2022 and has weakened from the psychological level of 80 per US dollar on Tuesday, but the source said if the Reserve Bank of India (RBI) had not acted, this fall would have been somewhere else. Would have been more to stop the fall.
RBI’s currency reserves have fallen by more than $60 billion from its peak of $642.450 billion in early September, partly due to a change in valuations, but largely due to dollar selling interventions.
Despite the decline, the RBI’s reserves of $580 billion remain the fifth largest in the world, giving the central bank confidence in its ability to prevent any sharp, jerky depreciation of the currency.
“They have shown that they will use the reserves of their own accord to prevent volatility in the rupee. They have the means and they have demonstrated a willingness to use it,” the source said.
“The RBI may spend another $100 billion, if needed, to protect the rupee,” the source said.
The source said that the RBI, as per its stated stance, does not seek to protect the rupee or keep it at a certain level, but will act to avoid any depreciation in the currency.
RBI did not immediately respond to a query seeking comment.