Why has RBI been selling dollars in the market, as reported in sections of the media?

The Reserve Bank is estimated to have sold close to $2 billion worth of US dollars in the currency markets. The purpose of the sale was to curb swings in the exchange rate after the rupee went into a free fall in the light of worsening geopolitical situation, FII selling and the spike in crude oil prices. This was one of the biggest central bank interventions taken up by the RBI in the last few years amidst rising currency volatility and sovereign risk to India.

The rupee has been under tremendous pressure in the last few weeks amidst rising crude prices as well as he developing situation created by the ongoing Russia Ukraine war. Most of the state owned banks were selling dollars through spot and GIFT city branches on behalf of buying. Much of the dollars also got absorbed as oil companies were buying dollars aggressively. RBI’s intervention has helped the rupee to stay under Rs.76/dollar.