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Charts & Analysis

Chart Of The Day: RBI Sells $7.8 Bn In Dec 2011

The rupee hit a low of Rs. 54 to a dollar in December, and since then, has recovered back to Rs. 49. Much of this move involves USD sales by the RBI. Since the RBI dollar sale data is released with a 2 month lag, we’ll only know the extent of the selling in a few months – but data has come in till December:

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December saw dollar sales of $7.8 billion dollars – the second highest ever in a month. The highest was the massive 18.7 billion dollar sale to let foreigners exit with the Lehman crisis hitting its peak in October 2008.

Few notes:

    • The rupee in 2008 had also spiked to Rs. 50 odd but recovered quickly; the dollar sales by the RBI helped.
    • In 2008, though, the RBI had a few years of buying – nearly all of 2007 saw consistent buying by the RBI. in 2009-11 the RBI has not really intervened much in the dollar market – till September.
    • Net dollar buys by RBI in 2007-08: $78 billion
    • Net dollar selling  by RBI in 2008-09: $35 billion
    • Since the rupee recovered the most in January, we’ll have to look at the data revealed in March to see exactly how much the RBI sold or bought in Jan.
    • Some of this may not be dollar selling, it could be the selling of Euros or other currency (perhaps?). I would imagine though that much of the selling was dollars.
    • Net dollar sells from Apr to Dec 2011: $12.5 billion, or 65,000 cr. – that much liquidity has been taken away from the system, and has been replaced through buying government bonds through “OMO” auctions.

That’s our chart for the day . Thoughts?