Mumbai: The Reserve Bank of India (RBI) made a record net purchase of $43.26 billion in the spot foreign exchange market in August as it absorbed dollars amid inflows from the FCNR(B) scheme. However, these purchases did not translate into an equivalent increase in foreign exchange reserves, as the central bank simultaneously undertook large foreign exchange sell/buy swaps.
The transactions pushed the RBI's net forward dollar sales position to a record $200.06 billion at the end of August, up from $136.77 billion a month earlier.
The RBI has been managing substantial dollar inflows following measures introduced in June to attract foreign currency through non-resident Indian deposits and overseas borrowings by banks and public sector companies. Banks brought in dollars under these schemes and swapped them with the central bank, allowing the RBI to absorb the inflows while managing their impact on the rupee.
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The measures attracted more than $127 billion by the August 31 deadline, data showed.
The RBI's foreign exchange reserves peaked at $785 billion in early September.
At the same time, the RBI has been intervening in the foreign exchange market to moderate volatility in the rupee amid geopolitical uncertainty, elevated oil prices, and pressure on capital flows.