The Reserve Bank of India (RBI) turned net sellers of US dollars in the financial year ended March 31, 2021, offloading a net $25.52 billion in the spot market, according to data from the government released on Wednesday.
The RBI’s net sale of dollars is the first instance in seven years and stems from its efforts to manage the macroeconomic environment through foreign markets intervention.
The RBI has previously been a net buyer of US dollars in the spot market with most inflows coming from remittances, export proceeds and foreign direct investment. The RBI had purchased a net of $22.8 billion US dollars in FY20.
Going forward, the RBI is likely to remain a net seller of dollars for some time given the commitment to stimulate growth with more accommodative fiscal policy. This could extend to FY24, as the focus remains on maintaining the macroeconomic balance.
