The Reserve Bank of India sold US dollars across both onshore and offshore currency markets this month to prop up the rupee as it weakened toward a record low.
India’s central bank sold “at least $5 billion” worth of the US currency, one of the people said, requesting anonymity as the information is private, reported Bloomberg quoting people familiar with the transactions.
The RBI did not respond to an email seeking comment.
If the trend continues, this could mark the RBI’s largest month of net dollar sales since January.
The rupee touched 87.89 per dollar last week, nearing its all-time low, after US President Donald Trump doubled tariffs on Indian goods on August 6 to 50 per cent as a penalty for purchases of Russian oil.
Economists warn a weaker rupee could stoke imported inflation and strain an already fragile economic recovery.
The intervention indicated “a potential shift away from the RBI’s previously restrained approach under Governor Sanjay Malhotra, who took office in December,” according to Bloomberg.
The currency has already depreciated over 2 per cent this year, placing it among Asia’s worst performers.
Nearly half the fall occurred in the past two weeks after signs emerged of Trump’s plan to raise tariffs.
Sources told Bloomberg the central bank stepped into the offshore market several times last week just before domestic currency trading began at 9 am in Mumbai, using so-called non-deliverable forwards to guide the rupee’s trajectory without selling large dollar volumes outright — a strategy relied on last year.
RBI’s latest foreign-exchange reserves data points to increased intervention, with stockpiles dropping by $9.3 billion — the steepest fall since November — to $689 billion in the week ending August 1.
The report noted part of the decline could be due to valuation changes in global currencies, not just dollar sales or purchases.