RBI net seller of US dollar

RBI net seller of US dollar

Subject :Economy

Section: External Sector

Context:

In FY 2023, the Reserve Bank of India(RBI) became a net seller of the US  dollar after remaining a net purchaser for three consecutive years. It sold $ 25.52 billion on a net basis in the spot foreign exchange market.

Why did the  RBI became net seller of dollars

The RBI’s decision to sell the greenback was to prop up the rupee, which depreciated by almost Rs 6,or 8 percent, to 82 level against the dollar as on March 31,2023,from 76 as on April 1,2022.During the previous fiscal, higher import bills due to surge in oil prices after Ukraine war leading to surging US dollar demand to buy crude oil, global inflation leading to raising of interest rates by US federal reserve ,leading investors to invest in US economy further draining foreign exchange reserve towards US economy. More than 37000 crores of foreign portfolio investments have been pulled out in equity markets and 9000 crores in debt market.

Income of RBI by selling US dollars

RBI generated huge profits from sale of US dollars, so much so that it transferred 87,000 crores this fiscal to the central government, a 188% jump from 30,500 crores in fiscal year 2021-22.