Rupee Weakens 1.6% in August; RBI Steps In with Dollar Sales

In August, the Reserve Bank of India sold $7.7 billion to curb exchange rate fluctuations and arrest the rupee's decline against the US currency. As per the dollar sales/purchases data published in the RBI's latest bulletin, the central bank's net dollar sales in August were $7.69 billion, nearly three times higher than the previous month.

The data also revealed that the Reserve Bank did not purchase US dollars in July and August. The Reserve Bank's stated stance is that it does not target any level or band for the rupee-dollar exchange rate, but intervenes in the foreign exchange market only when there is excessive volatility.

The rupee depreciated 1.6 percent against the US dollar in August. The Indian rupee also declined against the dollar in September amid rising trade tensions, growing global uncertainties, and a continued decline in foreign portfolio investment.