| Date: |
15-07-2010 |
| Subject: |
RBI did not intervene in FX market in May |
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The Reserve Bank of India (RBI) did not intervene in the foreign exchange market in May for the sixth straight month, indicating global risk aversion that caused the rupee to weaken was taken in its stride.
The rupee had fallen to 47.75 per dollar in May, its weakest since Oct.1, 2009.
The rupee's fortunes are closely linked to flows into and out of the stock market. Foreigners pulled out about USD 2 billion in May from the Indian equity market, compared with an inflow of USD 2.1 billion in April.
Foreign funds have purchased a net of around USD 8 billion of stocks in the year to date, adding to record inflows of USD 17.5 billion in 2009.
In 2009, the central bank sold a net USD 5.8 billion to prevent the rupee from depreciating sharply.
The rupee had dropped to a record low of 52.2 in early March 2009, but it ended the fiscal year 2009/10 up 4.7% boosted by large foreign fund inflows and periodic RBI intervention.
Source : Money Control
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