India’s central bank sold about $7 billion to defend the rupee last Friday, in what was one of its largest direct interventions in months, according to people familiar with the matter.
The Reserve Bank of India intervened across both onshore and offshore markets as the currency approached the record low, said the people, who asked not to be identified discussing private information.
The RBI did not immediately respond to calls and an email seeking confirmation of the dollar sales.
The surge in crude prices earlier this month had hit Asia’s oil importers hard, prompting authorities in the Philippines to also intervene to protect the currency. In India, the RBI followed up Friday’s intervention with dollar sales over the next two sessions, helping lift the rupee further away from the all-time low.
The magnitude of the dollar sales underscores the RBI’s resolve to support the rupee. The currency traded at 95.7437 per dollar on Thursday, about 1.3% away from the record low.
The RBI’s Friday move came on a day when Taiwan’s central bank also stepped up its currency defense, asking some banks to withdraw orders to buy dollars. The Philippine central bank intervened in a small way to defend the peso last week, Governor Eli Remolona said Tuesday.
The increase in the RBI’s dollar sales comes as its recent steps to boost capital flows add to the central bank’s foreign currency buffers, giving it greater ammunition to defend the rupee. The response to the measures has been robust so far, with banks mobilizing $32 billion, RBI Governor Sanjay Malhotra told the Hindu Business Line earlier this week.
India’s foreign exchange reserves were at $676.2 billion as of July 17, rising more than $9 billion over three weeks.
