The Reserve Bank of Indias outstanding net forward sales of dollar to stabilise the rupee have touched a high $14 billion as on June 2012 as against $ 3.23 billion at end of March 2012,indicating that the RBIs preference for forward dollar sales to cushion the impact of its foreign exchange market intervention.
The RBIs cumulative dollar sales in the spot market were $20.13 billion for the fiscal ended March 2012,the central bank said in its monthly bulletin.
The RBI was active in the spot market selling dollars till January 2012 to stem the rupee slide. However,it changed its strategy from March 2012 in the wake of liquidity impact from spot dollar sales.
The RBI stepped up its presence in the forward market with cumulative net sales of $10.3 billion in May and $14.08 billion in June. The rupee had an all-time low of 57.12 against the dollar on June 22 due to higher demand for the dollar and poor capital inflows. On the other hand,RBI sales in the spot market during May were $485 million and $50 million in June.
Due to a significant drawdown in Q3 of FY12,the level of foreign exchange reserves (including valuation) declined from $304.8 billion at end-March 2011 to $294.4 billion at end-March 2012.
After being largely range bound in the first four months of FY12,the rupee depreciated by about 17 per cent during August to mid-December,2011 reflecting global uncertainties and domestic weaknesses.