The Reserve Financial institution of India bought a document $398.71 billion of international foreign money in 2024-25 on a gross foundation because the Indian central financial institution stepped up its defence of the rupee amid a risky world setting. The RBI’s sale of international foreign money within the spot market within the final monetary yr was sharply larger than the $153.03 billion it had bought in 2023-24 and the earlier document of $212.57 billion in 2022-23, information launched late Wednesday by the central financial institution confirmed.
To make sure, the RBI additionally purchased international foreign money closely final yr, leading to a web sale of $34.51 billion for the 12 months ended March 2025. Nevertheless, this was solely the seventh time within the final three a long time – information for which is obtainable – that the central financial institution bought extra international foreign money in a yr than what it purchased. Additional, the $34.51 bought on a web foundation in 2024-25 is second solely to the $34.92 billion bought in 2008-09 in the course of the world monetary disaster.
Turbulent yr
After a reasonably secure couple of years, the rupee started weakening sharply within the second half of 2024-25 because it grew to become more and more seemingly Donald Trump would return to the White Home as president of the US for a second time period. The RBI’s interventions within the foreign money market peaked in December 2024 when it bought an enormous $69.05 billion – essentially the most it has ever bought in a month.
All in all, the RBI bought $291.03 billion – or 73 per cent of its full-year product sales – within the second half of 2024-25 because the panic attributable to Trump’s protectionist commerce insurance policies pushed the rupee to an all-time low of 87.95 per greenback in early February 2025.
Falling reserves
The RBI’s defence of the rupee was not with out its price, with India’s international trade reserves slumping by round $80 billion betweeen late September 2024 and mid-January 2025 to underneath $625 billion. To draw extra capital inflows, the then RBI governor, Shaktikanta Das, introduced in December 2024 that the ceiling on rates of interest banks can supply on so-called Overseas Forex Non-Resident (Financial institution) – or FCNR(B) – deposits was being raised by 150 foundation factors till March 2025. One foundation level is a hundredth of a share level.
Nevertheless, information launched Wednesday by the RBI confirmed the comfort appears to have made little or no distinction, with whole inflows within the aforementioned FCNR(B) deposit scheme in 2024-25 amounting to $7.08 billion in comparison with $6.37 billion in 2023-24.
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