The intervention covered the first five months of 2026, with the central bank also offering a concessional swap facility for FCNR(B) deposits in June to attract inflows.
Alpha Score of 68 reflects moderate overall profile with strong momentum, strong value, weak quality, moderate sentiment.
The Reserve Bank of India sold a net $14.9 billion in the foreign exchange market during January-May 2026 to counter excessive volatility in the rupee, Minister of State for Finance Pankaj Chaudhary told Parliament on Monday.
In a written reply to the Lok Sabha, Chaudhary said the rupee's exchange rate is market-determined and the central bank does not target any specific level or band. The data, drawn from RBI records, covers the first five months of the year.
The minister also detailed a package of measures announced on June 5 to attract dollar inflows. The RBI offered a concessional swap facility for Foreign Currency Non-Resident (Bank) deposits, known as FCNR(B), and eased terms for External Commercial Borrowings and Overseas Foreign Currency Borrowings.
The swap facility lets banks lock in a favorable exchange rate while the central bank absorbs the dollars, adding to reserves without directly selling in the market. The three measures are designed to supplement the RBI's spot intervention by encouraging banks and companies to bring dollars into the country, Chaudhary said.
Traders said the combination of spot sales and the June 5 package signals a preference for managing volatility rather than defending a specific line. The net sale of $14.9 billion is modest relative to India's roughly $650 billion in foreign exchange reserves, giving the RBI room to intervene further if needed, they said.
The net sale of dollars drains rupee liquidity from the banking system. That can push short-term interest rates higher. The RBI's monetary policy committee kept the repo rate unchanged at 6.50% in June. The liquidity squeeze from forex intervention has tightened conditions in the interbank market, traders said.
Chaudhary also said that foreign exchange reserves fluctuate due to multiple factors, including RBI purchases and sales, income from reserve deployment, government aid receipts, and revaluation changes. The net sale of $14.9 billion during Jan-May implies the central bank was a net seller over that period, absorbing rupee liquidity from the banking system.
The minister's reply did not offer any forward guidance on the rupee or future intervention. The data covers only the first five months of the year. The next scheduled policy statement from the central bank is due in October.
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