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Charts & Analysis

RBI Stops The Mad Buying of Dollars in August, Reserves Continue To Dip

RBI has stopped buying dollars, it seems. In August 2014, it sold about $511 m of dollars, but bought $421 million of forwards, effectively staying flat on trade.

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The USDINR went to about Rs. 60.9, up about 1%. The RBI hasn’t been buying, and FII figures for August were reasonably positive (Rs. 22,000 cr. or about $3.6 bn of net buying).

So sales must be from higher imports or higher debt borrowing by Indian companies.

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August notwithstanding, the RBI has been buying a heck of a lot of dollars:

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In terms of total outstanding forward exposure, we get data by maturity buckets,which shows the longer term maturity (approximately November 2016) at $25 billion (net sale), but is matched by forwards around 1 year of $26 billion (net purchase).

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As we see the dollar strengthening against all global markets, we see the RBI rushing to protect the rupee as well. In fact in September, it’s likely they sold a lot more; Here’s the Forex reserve situation:

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It’s getting uglier.