MUMBAI: The constant pressure on the rupee—primarily due to the ongoing trade war—has seen the Reserve Bank selling net of $7.7 billion in the spot foreign exchange market in August, the rupee fell the most plumbing to the worst low of 88.89 on September 23. According to the latest monthly bulletin from the Reserve Bank, it did not purchase any dollars but sold a much as $7.7 billion in August, which is more than three times it sold in July when the total outgo was only $2.54 billion in the spot market.
The rupee had lost 0.68 percent to 88.19 against the dollar, breaching the 88-per-dollar mark for the first time, in the month and close to 4.61 percent year to date. The RBI’s net outstanding forward sales stood at $53.36 billion as of end-August compared to a net sale of $57.85 billion at the end of the previous month, the bulletin data showed.
The central bank intervenes in the spot and forward markets to curb exchange rate volatility. On October 20, the rupee settled slightly higher against the dollar at 87.9275, with the RBI likely back in the market through state-run banks, reinforcing support for the currency near the 88 level.
The rupee has been one of the worst performers among its Asian peers having lost a whopping 4.61 percent year to date with September being the worst month. However the unit gained this Monday and Tuesday to the tune of 10 bps to 87.9620 on Tuesday. During October, the rupee has strengthened 0.39 percent, but is down by 4.61 percent over the last 12 months. The rupee hit all-time low of 88.89 on September 23.