Jun.2013-Sep.2013 Sold $14.24 billion
During the 1
week of May 2013, INR was hovering around 54. US Fed hinted at Fed tapering on 22.05.13. From 54 in the middle of May.13, INR fell heavily to 68.80 by 28.08.13. RBI sold US dollar to prevent INR falling heavily against USD.
30.09.13: 62.58 28.08.13: 68.80 31.07.13: 60.86 30.06.13: 59.39 31.05.13: 56.58 22.05.13: 55.66 30.04.13: 53.69 31.03.13: 54.29
RBI in September 2013 created two swap windows for FCNR(B) funds and Banks' Overseas Borrowings. Through them, it collected USD 34 billion till 30 November 2013—part of this foreign exchange was added to India’s foreign exchange reserves.
Movement of Forex Reserves in FY 2013-14:
Accretion or depletion of India’s forex reserves depends on rupee exchange rate, capital inflows to India and RBI’s net intervention in the markets. India’s latest foreign exchange reserves, as on 11 April 2014, stood at $309.44 billion (out of which gold accounts for $21.57 billion). From a level of $292.65 billion at end-March 2013, forex reserves came down by $17 billion to $275.50 billion by the end of August 2013—as rupee fell sharply against the dollar and RBI was selling dollars to prop up rupee (see above table). As rupee started appreciating since the end of August 2013, RBI started adding reserves. Between September 2013 and December 2013, reserves rose by $20 billion to close at $295.71 billion (end-Dec.2013). At the end of March 2014, India’s reserves stood at $303.67 billion, with further addition of $8 billion.
To Sum Up:
Compared to the period of May.2013-Dec.2013, Indian rupee’s volatility has come down to a great extent providing some cheer to the financial markets. The drastic reduction, engineered by the Indian government, of current account deficit in FY 2013-14 has also contributed to the rupee appreciation and to the relative stability of the exchange rate. India’s national elections are underway right now and the future movement of exchange rate will much depend on the structural policies that the next government will bring to the Indian economy.
My Recent Tweets:
As RBI buys US dollars to shore up India's forex reserves, it releases rupees into the banking system. Won't this lead to higher inflation?
— RamaKrishnaVadlamudi (@vrk100) April 20, 2014