Bloomberg News

India’s Central Bank Sells Most Foreign Currency in 32 Months

January 12, 2012

Jan. 12 (Bloomberg) -- India’s central bank sold the most foreign currency in 32 months in November, official data show, as the rupee plunged 7 percent against the dollar.

The Reserve Bank of India sold $2.92 billion in November, according to a report published on its website today, the most since March 2009. Central banks intervene in currency markets by arranging purchases or sales of foreign exchange.

The rupee fell 16 percent last year, the worst performance in Asia, as Europe’s debt crisis slowed global growth and damped demand for emerging-market assets. It has rebounded 2.4 percent in 2012 to 51.81 per dollar as of 2 p.m. in Mumbai, after the authorities took steps late last year to curb speculation and volatility in the foreign-exchange market and attract foreign investment.

The government allowed foreign investors to buy $10 billion more of rupee-denominated bonds and opened up a part of India’s retail sector to foreign-direct investment. The central bank tightened rules on trading in the domestic currency-forwards market, allowed Indian companies easier access to overseas borrowing, and raised interest rates on local bank deposits owned by Indians living abroad.

--Editors: Andrew Janes, Anil Varma

To contact the reporter on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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